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TargetingcancerAntisoma plcAnnual Report and Accounts 2008

Antisom

a plc A

nnual Repo

rt and Accounts year end

ed 30 June 2008www.antisoma.com

Antisoma plcChiswick Park Building 5London W4 5YFUK

T: +44 (0)20 3249 2100F: +44 (0)20 3249 2101 E: [email protected]: www.antisoma.com Company registered number 03248123

01 Highlights

04 Portfolio summary

06 Joint Chief Executive and Chairman’s statement

10 Financial review

12 Board of Directors

14 Directors’ report (including Business review)

17 Corporate social responsibility review

19 Report of the Board on remuneration

25 Corporate governance

28 Independent auditors’ report to the members of Antisoma plc

29 Consolidated income statement

29 Consolidated statement of recognised income and expense

30 Consolidated balance sheet

31 Company balance sheet

32 Consolidated cash flow statement

33 Company cash flow statement

34 Notes to the consolidated financial statements

58 List of advisors

Overview Governance Financial statements

Contents

Antisoma plc Annual Report and Accounts 2008

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ASA404 enters substantial phase III programme in lung cancerFirst pivotal phase III trial in front-line lung cancer initiated

Plans announced for second pivotal trial in second-line lung cancer

Acquisition of Xanthus expands and advances pipelineXanthus Pharmaceuticals, Inc. acquired for £23.7 million

Adds key phase III blood cancer product AS1413 (formerly Xanafide)

Adds US rights to niche oncology product oral fludarabine, in registration with FDA

Adds promising preclinical programme in autoimmune diseases

Expands and enhances US operation

New data and progress across pipelineSupportive phase II data on ASA404 in lung and prostate cancers

Positive long-term data from AS1413 phase II trial in secondary AML

AS1411 enters phase II trials in renal cancer and AML

Encouraging preliminary data from AS1411 phase II trial in AML

AS1409 enters phase I trial

Financial summaryCash and liquid resources of £66.9 million at 30 June 2008 (2007: £61.4 million)

£20.9 million raised in oversubscribed fundraising linked to acquisition of Xanthus

Milestone payment of £12.6 million ($25 million) received from Novartis

Full-year profit of £12.3 million (2007: £9.8 million loss)

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Antisoma is a biotechnology company specialising in the development of novel drugs for the treatment of cancer.


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Antisoma has a diverse portfolio of drugs in development, including small molecules, antibody-based therapies and a DNA aptamer. These drugs act against a wide range of cancer targets via different mechanisms, and are being tested in a variety of cancer indications that include both solid tumours and blood cancers. Each drug has an independent chance of successfully completing trials, and we believe this diversity in our pipeline is an important strength.

Diversity


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We have a clear focus on cancer, one of the largest growth areas among pharmaceutical markets and a disease where the application of new insights continues to provide many new commercial opportunities. We believe that the focus of our organisation on identifying and exploiting oncology opportunities is important to our success.

Focus


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Portfolio summary

Non-small cell lung cancerThe lead indication for ASA404

Prostate cancerA randomised phase II study has been conducted

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ASA404 (formerly AS1404)

ASA404 is a small-molecule Tumour-Vascular Disrupting Agent (Tumour-VDA) that selectively disrupts established tumour blood vessels.

Secondary acute myeloid leukaemia (sAML)

>AS1413 (formerly Xanafide)

AS1413 is a DNA intercalator that induces apoptosis by blocking binding of the Topo II enzyme to DNA.

Chronic lymphocytic leukaemia (CLL)

>Oral fludarabineOral fludarabine is a nucleoside analogue that inhibits DNA synthesis.

Acute myeloid leukaemia (AML)Renal cancer

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AS1411AS1411 is a DNA aptamer that targets nucleolin.

Breast cancer>AS1402AS1402 is a humanised monoclonal antibody (huHMFG1) against MUC1.

Renal cancerMelanoma

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AS1409AS1409 is a fusion protein combining the anti-tumour cytokine IL-12 with the tumour-targeting antibody BC1.

Lung cancer>P2045P2045 is a synthetic peptide-based targeted radiopharmaceutical.


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Portfolio highlights

Product pipeline

Phase I Phase II Phase III Registration

ASA404Worldwide partnership with Novartis with milestones of up to $890 million

Option to co-sell drug in US

Novartis conducting phase III programme in lung cancer

AS1413Unpartnered drug in phase III development

Potential first entrant in secondary AML

Oral fludarabineAttractive niche sales opportunity in US

Currently in registration with FDA

AS1411Highly novel aptamer therapeutic

Potential against both solid and blood cancers

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OverviewThis has been a year of notable achievements for Antisoma. Novartis has advanced our potential blockbuster drug ASA404 into a substantial phase III programme in lung cancer. Our acquisition of Xanthus Pharmaceuticals, Inc. in June was a transforming deal, leaving us with a considerably more mature and diverse pipeline. This now includes two phase III drugs and one in registration among seven cancer drugs in the clinic. We are beginning the transition from a company that develops cancer drugs into a company that both develops and commercialises its own products.

ASA404 enters substantial phase III programme in lung cancerOur Tumour-Vascular Disrupting Agent ASA404 has made excellent progress over the past year. In April, our licensing partner Novartis started ‘ATTRACT-1’, a 1200-patient, pivotal phase III trial of ASA404 as a first-line treatment for non-small cell lung cancer. This trial is designed to support applications for marketing authorisations; these applications are expected to take place in 2011 if the results of the trial are positive.

More recently, we announced that Novartis also plans to conduct a second phase III pivotal trial, called ‘ATTRACT-2’, in patients receiving second-line treatment for non-small cell lung cancer. This 900-patient trial is expected to start before the end of 2008 and is designed to support marketing applications in this additional market segment.

The phase III trial programme builds on two positive phase II trials in lung cancer. These suggested that a range of outcomes including survival were improved when ASA404 was added to standard chemotherapy treatment. Our most recent analysis of data from these trials, presented at the American Society of Clinical Oncology (ASCO) meeting in June, showed that patients with both major types of lung cancer (squamous and non-squamous) had improved outcomes and acceptable safety with ASA404.

Lung cancer is an area of high unmet medical need and is amongst the most prevalent cancers worldwide. We are very pleased with the breadth of Novartis’ programme in lung cancer, which as well as the two pivotal studies includes supporting studies such as a phase I trial in Japan.

ASA404 also has potential against a variety of other solid tumours. We have announced encouraging findings from a randomised phase II trial in prostate cancer. Novartis is now considering what the next steps should be in prostate cancer as part of a wider review of additional indications in which ASA404 could be developed. Acquisition of Xanthus broadens and advances pipelineIn June we completed the acquisition of Cambridge, Massachusetts-based Xanthus Pharmaceuticals, Inc. in an all-share deal valued at £23.7 million. This added three major assets to our pipeline: AS1413 (formerly Xanafide), a drug in phase III development for secondary acute myeloid leukaemia (secondary AML); oral fludarabine, a niche product in registration with the FDA (US Food and Drug Administration) for the treatment of chronic lymphocytic leukaemia (CLL); and a promising preclinical programme of Flt-3 inhibitors for autoimmune conditions. The acquisition has also greatly enhanced our US operations, with our Princeton office now absorbed into the larger Xanthus facility in Cambridge.

Joint Chief Executive and Chairman’s statement

Barry PriceChairman

Glyn EdwardsChief Executive Officer


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AS1413 has first-entrant potential in secondary AMLAS1413 (formerly Xanafide) is the most important asset added to our pipeline by the acquisition of Xanthus. It is a novel chemotherapy drug with the attractive property of evading the multi-drug resistance mechanisms that often limit the effectiveness of chemotherapy treatments.

AS1413 is in a pivotal phase III trial in secondary AML, which is being conducted under a Special Protocol Assessment (SPA) from the FDA. The drug could be the first to gain a specific marketing authorisation for this under-served indication, as well as having potential for wider application in other blood cancer settings.

Data from an 88-patient phase II study of AS1413 in secondary AML have been presented at major meetings. These show a complete remission rate of around 40% with an AS1413-based regimen in secondary AML, compared with rates around 25% seen with current standard care in two previous studies. The latest data from the phase II trial, presented at the ASCO and European Haematology Association (EHA) meetings in the summer, provide evidence that a good number of the responses seen in secondary AML patients are of sustained duration relative to the poor prognostic expectations in this disease.

Since the acquisition of Xanthus, we have undertaken a review of the size and statistics of the phase III trial, and are currently in discussion with the FDA about these aspects. We expect that the trial will ultimately include around 450 patients, and that it will report in a broadly similar time frame to the phase III trials on ASA404.

Should the phase III trial of AS1413 prove successful, we plan to sell the drug ourselves in the US while seeking partners for marketing in other countries. This plan fits well with our option to co-sell ASA404 with Novartis in the US. Sales infrastructure provided under the Novartis deal could be leveraged to sell AS1413.

Oral fludarabine FDA decision expected Another important asset from the Xanthus portfolio is oral fludarabine. This is a tablet formulation of a widely used chemotherapy drug for CLL, which is currently only available in the US as an intravenous formulation. A marketing application for oral fludarabine is being considered by the FDA. Based on the latest communications we have had with the FDA, we expect a decision on approval any time between now and June 2009.

We have US rights to oral fludarabine. Outside the US, oral fludarabine is marketed by Bayer-Schering Pharma AG. In European countries, the oral formulation has assumed a substantial share of the fludarabine market since its launch, and we believe that the drug represents an attractive niche sales opportunity in the US.

We have decided that the best way to realise the value of oral fludarabine is through a commercialisation deal with a partner that has established marketing infrastructure in the US. We believe that FDA approval of the product would put us in a strong position to conclude such a deal.

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“ This has been a remarkable year. The progress of ASA404 in lung cancer and the acquisition of Xanthus have given our pipeline a new scale and maturity, with two drugs in phase III and one in registration with the FDA.”

Glyn Edwards Chief Executive Officer


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AS1411 now in two phase II trials In August 2007, we announced the start of phase II trials of our aptamer drug, AS1411, with the initiation of a 70-patient randomised trial in acute myeloid leukaemia (AML). This trial compares patients receiving the standard current therapy, cytarabine, with patients receiving cytarabine plus AS1411. Two different doses of AS1411 are being tested, and preliminary findings based on comparison of the lower-dose AS1411 group with the control group are encouraging. We look forward to seeing additional data from this trial during the coming year.

In September 2008, we initiated a second phase II trial. This is a 30-patient single-arm study evaluating AS1411 as monotherapy in renal (kidney) cancer. It seeks to build on the promising findings seen in our phase I trial in patients with this disease.

Earlier-stage pipeline provides future growth potentialBehind the programmes described above, we have a number of earlier-stage assets. These are an important element of our business, since they have the potential to become future late-stage products that could add further value for shareholders.

Our antibody drug AS1402 will shortly begin a randomised phase II study in breast cancer; our antibody-cytokine fusion product AS1409 has entered a phase I study in melanoma and renal cancer; and P2045 is under review following initial clinical investigation in lung cancer. We also have several preclinical programmes in oncology, including the AMPK programme licensed from Betagenon in April, and one very exciting non-oncology programme evaluating the targeting of Flt-3 in autoimmune diseases. Though the Flt-3 programme falls outside our focus on cancer, it has shown such potential that we have decided to continue our investment in its development with the aim of producing a strong package of data to support a partnering deal.

Financial position bolstered by partner revenues and investor supportWe finished the year with cash and short-term investments of £66.9 million, up from £61.4 million last year. This increase reflects the receipt of a milestone payment of £12.6 million ($25 million) from Novartis when they initiated the first phase III trial of ASA404 and our raising of £20.0 million net of costs from shareholders at the time we acquired Xanthus, offset by our operating expenditure. The support for our fundraising from public market investors and the owners of Xanthus was important in ensuring that we continued to have a strong balance sheet following the acquisition.

Total revenues for the year ended 2008 were £39.5 million, compared with £8.0 million last year. The difference mainly results from the increase in revenues relating to recognition of the upfront and milestone payments received from Novartis.

Joint Chief Executive and Chairman’s statementcontinued

“ We are now well placed to make the transition from a drug development company into a company that both develops and commercialises novel cancer drugs.”

Glyn Edwards Chief Executive Officer


09

Total operating expenses have increased from £21.8 million last year to £28.7 million this year, reflecting an increase in research and development costs from £14.5 million to £18.4 million and an increase in general and administrative costs from £7.3 million to £10.3 million.

The increase in revenues from Novartis has led to our recording a full-year profit of £12.3 million, compared with a loss of £9.8 million last year.

A full commentary on our financial results is provided in the Financial review.

Board developmentsIn line with our move towards becoming a company that commercialises as well as develops cancer drugs, we have appointed Michael Lewis as a Non-Executive Director. Mr Lewis’s most recent role was as President for Europe, Middle East and Africa and also Head of Global Marketing for the medical device company Gambro. He has also held senior executive and commercial positions in other medical technology businesses. During the year, Ann Hacker resigned as a Director, and we would like to thank her for her substantial contribution to the Board and in particular her dedicated work as Chairman of the Remuneration Committee.

OutlookWith seven drugs in the clinic, we look forward to a number of major product milestones in the year ahead. Novartis will shortly be initiating a second pivotal phase III study of ASA404, complementing their ongoing trial in first-line patients with a trial in the second-line setting. With the phase III study of AS1413 in secondary AML also gathering momentum, there will soon be three pivotal trials of Antisoma products in progress. While ASA404 and AS1413 are the key value drivers for the Company over the medium term, we have a very promising shorter-term niche opportunity in oral fludarabine, which is currently being considered for approval by the FDA. If the drug gains approval, this will provide a very good basis for a commercialisation deal. There are also important developments expected in the earlier-stage pipeline, particularly the emergence of further phase II data on AS1411, which could provide clinical proof of concept for this highly novel therapeutic. The Board believes that the increased scale and diversity of our pipeline following the acquisition of Xanthus, together with the funds that we have to support ongoing development work, put our business in a very strong position, and so we look forward to the future with confidence.

Glyn EdwardsChief Executive Officer

Barry PriceChairman

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The Antisoma team


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Financial review

Raymond SpencerChief Financial Officer

The following review should be read in conjunction with the consolidated financial statements and related notes on pages 29 to 57 of this Annual Report.

OverviewAntisoma has expanded and advanced its product pipeline through continuing investment in its existing development programmes and through the strategic acquisition, completed on 11 June 2008, of Cambridge, Massachusetts-based company Xanthus Pharmaceuticals, Inc. The principal assets of Xanthus are AS1413 (formerly Xanafide), which is in phase III clinical development, and the US rights to oral fludarabine, which is in registration with the FDA. Antisoma and its subsidiaries (collectively referred to as ‘Antisoma’ or the ‘Group’) now have seven products in clinical development.

Substantially all of the Group’s revenues, expenditures, operating profits or losses and net assets are attributable to the research and development (R&D) and commercialisation of its oncology pipeline.

Revenues are derived primarily from the recognition of the upfront and milestone payments received from Novartis and relating to rights granted to Novartis to develop and commercialise ASA404. The Group received $75 million following the signing of a licence agreement with Novartis in April 2007 and a further $25 million following the start of the first phase III clinical trial of ASA404 in lung cancer in April 2008. The clinical and regulatory costs associated with further development of ASA404 are the responsibility of Novartis.

Results of operationsRevenuesThe Group recorded revenues totalling £39.5 million in the year ended 30 June 2008 (2007: £8.0 million). Antisoma completed its obligations under the contract with Novartis when it reported the survival data from the last of its phase II clinical trials in August 2008. Accordingly, the period of recognition for the $75 million upfront payment is from April 2007 (signature of agreement with Novartis) to July 2008 and the period of recognition for the $25 million milestone payment is from April 2008 (start of the first lung cancer phase III trial) to July 2008. A balance of £5.4 million remains to be recognised in the financial year commencing 1 July 2008. Revenues also included £0.4 million (2007: £0.7 million) in respect of services and materials supplied to Novartis in connection with ongoing development of ASA404 and £0.3 million (2007: £0.7 million) in respect of recognition of revenues from milestones received from third parties.

Trading resultAntisoma made an operating profit for the year of £10.8 million (2007: loss £13.9 million). The improvement reflects the recognition of greater revenues arising from the contract with Novartis, as set out above, offset by an increase in operating costs. The net profit for the year was £12.3 million (2007: loss £9.8 million).

Acquisition of XanthusOn 11 June 2008 Antisoma issued 86,416,353 ordinary shares as initial consideration for the acquisition of Xanthus Pharmaceuticals, Inc. A deferred consideration of a further 9,568,951 shares will be issued 18 months after the initial consideration, subject to deductions based on claims for indemnity by Antisoma or as otherwise allowed under the terms of the acquisition agreement. In the period following the acquisition (11 June to 30 June 2008), Xanthus contributed £0.3 million to operating expenses of the Group with a further provision of £0.5 million for restructuring costs relating to closure of Xanthus’ Montreal facility.

Research and developmentTotal R&D costs have increased to £18.4 million from £14.5 million in 2007. R&D costs can vary significantly from year to year depending upon the stage of each development project, number of patients in treatment and follow-up, the extent of any pre-clinical studies that


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may be required and manufacturing costs. During the year, the Group was actively recruiting patients in a phase I trial of AS1409 and the first phase II trial of AS1411 and preparing for the start of a phase II trial of AS1402 and a second phase II trial of AS1411. The Group also relocated its R&D facilities to Welwyn, Hertfordshire in March 2008.

General and administrativeG&A costs have increased to £10.3 million from £7.3 million last year. Factors contributing to this increase included an increase in headcount and associated remuneration costs, costs associated with preparation for a potential NASDAQ listing, activities to acquire new oncology assets and the relocation of all UK operations (other than R&D) to new facilities in Chiswick Park, West London. The acquisition of Xanthus and the provision for restructuring costs to close their Montreal office also contributed to this increase.

Interest receivableInterest receivable increased from £1.2 million to £2.6 million, in line with higher average balances of cash and cash equivalents held during the year.

TaxationUK corporation tax contains favourable provisions for certain qualifying R&D activities that have enabled the Group to claim enhanced tax deductions (‘R&D tax credits’), which exceed the cost of such R&D activities. These R&D tax credits may be used to supplement trading losses that are carried forward against future profits or surrendered for a cash rebate at the prevailing rates, or (as in the current year) used to offset profits. Last year we were able to claim a cash rebate of £2.0 million by surrendering R&D tax credits.

The Group has significant brought forward losses against which trading profits can be offset. There is a tax charge of £0.3 million on non-trading profits, however, that cannot be offset. A deferred tax credit of £0.75 million that was provided at 30 June 2007 is no longer required and has been released this year.

Liquidity and capital resourcesCash, cash equivalents and short-term deposits at 30 June 2008 were £66.9 million (2007: £61.4 million). The Group raised £20.0 million (2007: £25.0 million) net cash through the sale of new ordinary shares.

Net cash used in operating activities was £10.7 million, whereas in 2007 the Group generated £23.5 million. The change reflects the timing of cash receipts from Novartis as well as underlying operating expenses, interest and taxation.

Current liabilities have fallen to £16.2 million as at 30 June 2008 from £39.7 million as at 30 June 2007; this follows a release of deferred-income provision created by the receipt of the upfront payment from Novartis. Trade creditors and accruals at 30 June 2008 were £9.9 million (2007: £7.5 million); the increase reflects consolidation for the first time of Xanthus liabilities amounting to £4.2 million.

The Group currently has the cash resources to progress its clinical programmes towards value creating milestones. An approval to market oral fludarabine in the US would also provide a significant opportunity to realise value through an out-license or disposal.

Earnings per shareEarnings per ordinary share were 2.7p compared with a loss of 2.4p in 2007.

Raymond SpencerChief Financial Officer


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Board of Directors

01: Barry Price, BSc, PhD, FRSCNon-Executive ChairmanBarry, 65, was appointed to the Board of Antisoma in April 1997 and became Chairman in February 1998. He is also a Non-Executive Director of Shire Pharmaceuticals plc and Chairman of Summit plc. He previously held the positions of Director at Chiroscience plc and Celltech Group plc and Director of Primary Production at Glaxochem Ltd.

02: Glyn Edwards, BSc, MBA, MBEChief Executive OfficerGlyn, 53, was appointed Chief Executive Officer in March 1998. He is an Executive Director of Antisoma plc and its subsidiary undertakings Antisoma Research Ltd and Cancer Therapeutics Ltd. Glyn is also an Executive Officer of the subsidiary undertaking Antisoma Inc. (formerly Aptamera, Inc.) and Xanthus Pharmaceuticals Inc. Prior to joining Antisoma, he was Director of Business Development at Therapeutic Antibodies.

03: Ursula Ney, BSc, PhD, MBAChief Operating OfficerUrsula, 56, was appointed Chief Operating Officer in February 2003. She is an Executive Director of Antisoma plc. Prior to joining Antisoma she was Chief Executive Officer of Charterhouse Therapeutics Ltd. Before her time at Charterhouse she spent 14 years at Celltech,

where she was Director of Development and served on the board. She held a Non-Executive Director role at a private Swedish company, Affibody, but resigned in June 2008.

04: Raymond Spencer BSc, ACAChief Financial OfficerRaymond, 53, was appointed Chief Financial Officer in October 1996. He is an Executive Director of Antisoma plc and its subsidiary undertaking Antisoma Research Ltd and Cancer Therapeutics Ltd. Raymond is also an Executive Officer of the subsidiary undertakings Antisoma Inc. (formerly Aptamera, Inc.) and Xanthus Pharmaceuticals Inc. He qualified as a Chartered Accountant with KPMG and, prior to joining Antisoma, was Finance Director at Cambridge Molecular Technologies Ltd.

05: Grahame Cook, MA, FCANon-Executive DirectorGrahame, 50, was appointed Non-Executive Director in July 1999. He has 17 years of investment banking experience and is a chartered accountant. He was, until 2003, Chief Executive Officer of West LB Panmure. He was a Managing Director in investment banking at UBS Ltd from 1995 to 1998 and a member of UBS’s Global Investment Banking Management Committee. He was a founder member of the TechMARK Advisory Committee.

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06: Michael Pappas, LLB, CANon-Executive DirectorMichael, 52, was appointed Non-Executive Director of Antisoma Research Ltd in 1993 and of Antisoma plc on formation of the Company in October 1996. He has a degree in law and is a member of the Institute of Chartered Accountants of Scotland. Michael currently serves on the boards of a number of companies including Alpheus Capital Management Ltd, Promethean plc and Kudos Independent Financial Services Ltd.

07: Birgit NorinderNon-Executive DirectorBirgit, 59, was appointed Non-Executive Director in December 2003. She is a trained pharmacist and has held senior executive positions in R&D in Pharmacia & Upjohn Corp. She has also held senior R&D positions at Glaxo Group Research Ltd, Astra Research Centre AB, Pfizer, Inc. and Parke Davis AB. She has been Chief Executive Officer and Chairman of Prolifix Ltd and currently serves on the boards of a number of biotechnology companies including deCODE genetics, Inc., Moberg Derma AB and Karo Bio AB. She is the chairman of Index Pharma AB and Laura AS.

08: Dale Boden, BANon-Executive DirectorDale, 51, was appointed Non-Executive Director in September 2005. He is President of BF Capital Inc., a US private investment firm that focuses on private equity, venture capital investing and real estate development. He also serves on the boards of several US companies. Dale is based in Louisville, Kentucky and was a Director and member of the executive committee of Aptamera, Inc. prior to its acquisition by Antisoma.

09: Michael LewisNon-Executive DirectorMichael, 49, was appointed Non-Executive Director in July 2008. His most recent role was as President for Europe, Middle East and Africa and also Head of Global Marketing for the medical device company Gambro. Before joining Gambro in 2002, he was CEO & Managing Director of Sybron, a specialist dental business based in Switzerland. Michael has also held senior commercial positions at Boston Scientific International in Paris and Bard International in New Jersey.

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Directors’ report (including Business review)

The Directors present their report and the audited financial statements for Antisoma plc (‘Antisoma’) and its subsidiaries (the ‘Antisoma Group’ or ‘the Group’) for the year ended 30 June 2008.

Principal activityThe Antisoma Group is a specialty biopharmaceutical development group, focused on developing novel products for the treatment of cancer.

Business reviewReview and future developmentsThe Group has continued to execute its strategy of progressing its pipeline of novel anti-cancer products towards commercialisation. A full review of the business and future developments is given in the Joint Chief Executive and Chairman’s statement on pages 6 to 9.

Principal risks and uncertaintiesThe nature of pharmaceutical development is such that drug candidates may not be successful due to an inability to demonstrate in a timely manner the necessary safety and efficacy in a clinical setting to the satisfaction of appropriate regulatory bodies, such as the Food and Drug Administration (‘FDA’) in the US and the European Medicines Agency (‘EMEA’) in Europe. The Group may be unable to attract, by itself or from partners, the funding necessary to meet the high cost of developing its products through to successful commercialisation.

Clinical and regulatory riskDrug substances may not be stable or economically reproducible. Unacceptable toxicities or insufficient efficacy in the chosen indication may cause the drug to fail or limit its applicability. Lack of performance by third-party Clinical Research Organisations or an inability to recruit patients may cause undue delays. Clinical and regulatory issues may arise or changes to the regulatory environment may occur that lead to delays, further costs or the cessation of programmes. Ethical, regulatory or marketing approvals may be delayed or withheld or, if awarded, may carry unacceptable conditions to further development or commercial success.

Competition and intellectual property riskMany companies are developing drugs that may compete with and restrict the potential commercial success of the Group’s products or render them obsolete. Companies may have intellectual property that restricts the Group’s freedom of use or imposes high additional costs to obtain licences. The Group’s intellectual property may become invalid or expire before its products are successfully commercialised.

Economic riskThe successful development and commercialisation of novel drugs carries a high level of risk and the returns may be insufficient to cover the costs incurred. Restrictions on health budgets worldwide or on the prices that may be charged for new drugs through competitive or other pressures may limit a drug’s sales potential. The Group may not be able to attract partners on favourable terms to help develop or commercialise its products. Any such partners may fail to perform or commit the resources necessary to successfully commercialise the Group’s products. All of the Group’s manufacturing is outsourced and supplies of product may be interrupted.

Financial riskSustainability is dependent upon generating cash flows from successful development and commercialisation of the Group’s products. Until then the Group will be dependent upon additional funding through completion of one or more licensing deals or through injection of capital. There can be no assurances that such funding will be achieved on favourable terms, if at all. Failure to generate additional funding may lead to postponement or cancellation of programmes and a scaling back of operations.

DividendsNo interim dividend (2007: £nil) was declared during the year and the Directors do not recommend payment of a final dividend in respect of the year (2007: £nil).

DirectorsThe Directors who held office during the year were as follows:

Executive Directors Non-Executive DirectorsGlyn Edwards Barry Price (Chairman – Independent) Raymond Spencer Ann Hacker (Independent) (Resigned 1 October 2007)Ursula Ney Grahame Cook (Independent) Birgit Norinder (Independent) Michael Pappas Dale Boden (Independent) Michael Lewis (Independent) (Appointed 9 July 2008)

Biographical details of the Directors are given on pages 12 to 13.

Directors’ interestsThe interests of Directors in the shares and options of the Company are given in the Report of the Board on remuneration on pages 19 to 24. None of the Directors had a material interest at any time during the year in any contract of significance with the Group other than a service contract. Information regarding Directors’ service contracts is given on page 21 within the Report of the Board on remuneration.


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Substantial shareholdingsNo single person directly or indirectly, individually or collectively, exercises control over the Company. The Directors are aware of the following persons, who had an interest in 3% or more of the issued ordinary share capital of the Company as at 16 September 2008.

Number of Shareholder ordinary shares % Holding

Leventis Holding SA 44,402,831 7.24Oxford Bioscience Partners 25,791,617 4.20Invesco Limited 22,388,640 3.65Legal & General Group 19,240,499 3.14

At this date no other person had notified any interest in the ordinary shares of the Company required to be disclosed to the Company in accordance with sections 198 to 208 of the Companies Act 1985 and representing a material interest of 3% or more or any non-material interest of 10% or more of the issued ordinary share capital of the Company.

EmployeesThe Directors are committed to continuing involvement and communication with employees on matters affecting both the employees and the Company. A full review of the policies relating to employees is given in the Corporate social responsibility review on pages 17 and 18.

Health, safety and environmentThe Directors are committed to ensuring the highest standards of Health and Safety, both for their employees and for the communities within which the Group operates. The Directors are also committed to minimising the impact of the Group’s operations on the environment. A full review of the policies relating to Health and Safety and the environment is given in the Corporate social responsibility review on pages 17 and 18.

Charitable and political donationsNo donations were made during the year (2007: £275).

Creditor payment policyThe Group seeks to abide by the payment terms agreed with suppliers whenever it is satisfied that the supplier has provided the goods or services in accordance with the agreed terms and conditions. The Group does not have a standard code of conduct that deals specifically with the payment of suppliers.

The average creditor days for the Group during the year were 24 days (2007: 29 days) and for the Company was nil (2007: nil).

Financial and non-financial Key Performance Indicators (‘KPIs’)The Directors consider cash and R&D spend to be the Group’s financial KPIs at the current stage of the Company’s development. These are detailed in the Financial review on pages 10 and 11. The Directors consider that the most important non-financial KPIs relate to the number of drugs under development and the development stages reached by these drugs in each indication, both of which are detailed in the Joint Chief Executive and Chairman’s statement on pages 6 to 9.

Risk managementThe Group’s risk management objectives and exposure to various risks are detailed above and in Note 18.

Additional information for shareholdersThe following provides the additional information required for shareholders as a result of the implementation of the Takeover Directive into EU law:

The structure of the Company’s issued share capital is shown in Note 20 to the financial statements.The Company is not aware of any agreements between shareholders on voting rights or that may result in restrictions in the transfer of securities.The shares issued as consideration for the acquisition of Xanthus are subject to certain restrictions on their transfer for a period of 12 months from the date of the acquisition. There are no other restrictions on the transfer of ordinary shares in the Company other than certain restrictions that may be imposed from time to time by laws and regulations (for example insider trading laws and market requirements relating to close periods) and pursuant to the Listing Rules of the Financial Services Authority whereby certain employees of the Company require the approval of the Company to deal in the Company’s securities.The Company’s Articles of Association may only be amended by a special resolution at a general meeting of shareholders.The Board can appoint a Director but anyone so appointed must be elected by an Ordinary Resolution at the next general meeting. Any Director who has held office for more than three years since their last appointment must offer themselves for re-election at the Annual General Meeting.Directors’ interests in the share capital of the Company are shown in the table on page 22.Major interests (i.e. those > 3%) of which the Company has been notified are shown on page 15.With the exception of the potential vesting of share options as detailed in the Report of the Board on remuneration and in Note 21, the Company is not party to any agreements which take effect, alter or terminate upon a change of control of the Company following a takeover bid. There are no agreements between the Company and its Directors or employees providing for compensation for loss of office or employment (whether through resignation, purported redundancy or otherwise) that occurs because of a takeover bid.

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Annual General MeetingThe Notice convening the Annual General Meeting, which will take place at 11.00 am on 18 November 2008 at the offices of CMS Cameron McKenna LLP, Mitre House, 160 Aldersgate Street, London EC1A 4DD, is expected to be sent out to shareholders on 13 October 2008. Details of the business to be transacted at the AGM can be found in the Notice.

AuditorsA resolution to reappoint the auditors, PricewaterhouseCoopers LLP, will be proposed at the AGM.

By order of the Board

Kevin KissaneCompany Secretary26 September 2008

Directors’ report (including Business review) continued


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Corporate social responsibility review

Antisoma’s business is the development of novel drugs that could deliver more effective and safer treatments to large numbers of cancer patients worldwide.

The Group is committed to operating its business in accordance with its corporate social responsibilities to all stakeholder groups. The Board is mindful of the importance of being socially responsible and strives to improve the Group’s approach to corporate social responsibility. The Group conducts its business with a view to minimising any possible adverse impact on the local community and our corporate social responsibility framework continues to develop as the Group matures.

The Group is a member of the BioIndustry Association (‘BIA’), the trade association for biotechnology companies in the UK, of which our Chief Executive Officer, Glyn Edwards is Deputy Chairman. The BIA has published a Code of Practice to establish principles of best practice for information communication and management amongst its members. The Group plays an active role in the BIA and complies with this Code of Practice.

Stakeholder communication The Group gives a high priority to effective communication with all stakeholders. Antisoma has a dedicated in-house communications team responsible for ensuring the comprehensive delivery of information to all stakeholder groups. The Group’s website operates a service whereby shareholders and others interested in the Group can request public documents such as press releases and annual and interim reports. Visitors can also register their details on an automated mailing list. Antisoma regularly webcasts Group presentations.

The Group is committed to sharing information with the wider scientific community. Senior members of staff participate in a variety of scientific forums in the cancer research field, and we regularly present and publish our work.

The Chief Executive Officer, Chief Financial Officer and Director of Communications meet regularly with analysts and major shareholders to update them on the Group’s business and to gain understanding of the markets’ expectations. Barry Price, our Chairman, is also available for meetings with investors.

Our people Much of our value and potential for success depends upon our staff and the experience and expertise they bring to the Group. The Directors believe in rewarding staff appropriately and have designed the Group’s remuneration policy accordingly. Employees’ salaries are benchmarked and all staff are members of the Company Share Option Plan. In addition, all permanent staff are eligible for life assurance cover, a private healthcare scheme and membership of the Group pension scheme. The Group has introduced enhanced policies relating to maternity and paternity leave, which exceed the current statutory position in the UK, and is in the process of developing appropriate policies relating to staff employed in the US, following the acquisition of Xanthus Pharmaceuticals, Inc.

The Group is committed to providing equal opportunities, irrespective of background, age, sex, race, sexual orientation, religion, gender, nationality, marital status or disability and has a section on its website highlighting current vacancies and information about recruitment policy. We aim to attract the best people in the industry and we believe in maximising every employee’s potential.

Management has an ‘open-door’ policy, and employees can raise questions about the Group or their employment easily and get issues resolved quickly. Staff appraisals are carried out once a year and annual objectives are set each July. Employees consider their objectives within the framework of the organisation as a whole, since we believe this helps to promote both greater efficiency and a sense of shared achievement.

We encourage in-house training and support staff in further study where appropriate. The Group strives to accommodate employees’ needs in order to enable them to balance their working and home life. Antisoma has a dedicated Head of Human Resources and a dedicated Recruitment Manager.

Antisoma’s intranet promotes internal communication, keeping employees up-to-date with current news and building good working relationships through information sharing. The Group also holds regular staff meetings.

The Group aims to conduct its business to the highest standards and with honesty and integrity at all times. The Group’s policies, with which employees are expected to comply, include guidance relating to standards of conduct, equal opportunities, gratuities, harassment and whistle-blowing.


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Our partnersThe Group works with a variety of partners to carry out the appropriate studies for the development of each of its products. Standard Operating Procedures are in place to ensure that partners are using appropriate standards for work being performed on our behalf, and we routinely audit vendors before appointing them. Contractors are chosen based on, amongst other things, technical ability, capacity, geographical location and quality standards. The quality standards used in human pharmaceutical development are GCP (Good Clinical Practice), GLP (Good Laboratory Practice) and GMP (Good Manufacturing Practice).

Health and SafetyThe Group is committed to providing a safe environment for its employees and others who are engaged in, or who may be impacted by, the Group’s operations. The Board is aware of its legal and moral obligations for Health and Safety at work and is committed to preventing accidents and minimising occupational ill health. Policies relating to Health and Safety are set out in the Group’s Safety Code of Practice. Our procedures are monitored, and improvements identified, through periodic external audits and internal safety inspections. The Group’s Health and Safety Committee meets regularly to discuss issues and promote good practice, and there are a number of Health and Safety Officers, whose role is to promote and monitor safe working conditions.

EnvironmentThe Group is committed to playing a part in protecting the environment and is aware of its corporate responsibilities. The Group seeks to minimise the impact of its activities on the environment. The Group’s policies relating to laboratory Health and Safety, including disposal of waste, are set out in the Safety Code of Practice. The Group endeavours to ensure that all gaseous emissions and liquid or solid waste products are controlled and disposed of, whether handled directly or via a third party, in accordance with applicable laws and regulations and with the minimum impact on the environment. The Group meets all the statutory requirements relating to handling and disposal of radioactive materials. All clinical waste produced by our laboratories is given a unique tag on removal to ensure that it can be traced back to the Group.

Corporate social responsibility review continued


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IntroductionThis report complies with the Combined Code on Corporate Governance published in June 2006 (the ‘Combined Code’) and sets out the Group’s remuneration policy and details of Directors’ remuneration. A resolution to approve this report will be proposed to shareholders at the Annual General Meeting (AGM) in November 2008.

PolicyThe Remuneration Committee aims to ensure that the Group is able to attract and retain Executive Directors and employees with the necessary skills and expertise by providing competitive remuneration, incentives and benefits that reward individual and group performance. The Remuneration Committee gives consideration to the guidelines set out in the Combined Code, as well as best practice guidelines published by the Association of British Insurers and the National Association of Pension Funds. The Remuneration Committee has carried out a review of the annual performance incentive and longer-term incentives and believes that they are constructed to meet the future needs of the Group and to align the interests of Executive Directors and employees with those of shareholders. The Remuneration Committee also believes that Executive Directors and senior employees should be encouraged to own shares in the Company to further align their interests with those of shareholders. The current remuneration policies, which will also apply through to the end of next year, are outlined below, as is a brief description of changes to remuneration policies, which it is intended should apply for the next year, subject to approval of shareholders at the November 2008 AGM.

CommitteeThe Remuneration Committee is comprised entirely of independent Non-Executive Directors and is now chaired by Dale Boden. Until her resignation on 1 October 2007, the Committee was chaired by Ann Hacker. Other Directors who served on the Remuneration Committee during the year are listed on page 26. The Remuneration Committee, which met four times during the year, makes recommendations to the Board regarding the policy for, and determination of, total compensation for Executive Directors and senior managers (‘the Management Group’). The Remuneration Committee also has responsibility for establishing the policy for total compensation for all employees within the Group and for approving share awards and share options. Hewitt New Bridge Street (‘HNBS’), who have considerable expertise in the biotechnology sector, were appointed under instruction from the Remuneration Committee to provide independent advice and analysis on compensation matters, including the provision of competitive market data. HNBS assisted the Group on the implementation of the Remuneration Committee’s decisions and on the valuation of share options under International Financial Reporting Standards (‘IFRS’). HNBS provides no other services to the Group. Remuneration Committee meetings are attended, as appropriate, by the Chief Executive Officer, who is invited to provide input on remuneration proposals other than those directly concerning his own remuneration. Barry Price also attended a number of meetings of the Committee at the request of the Chairman of the Remuneration Committee. The Company Secretary has provided administrative support to the Committee.

Components of Executive Directors’ and senior managers’ compensation packagesConsistent with the above policy, compensation awarded to the Management Group comprises a mix of performance and non-performance-related elements. In respect of Executive Directors, performance-related elements of pay should continue to increase and have the potential to represent more than half of total remuneration.

Base salarySalaries are reviewed annually taking into account the responsibilities and performance of each Director or senior manager and his/her expected future contribution. These are then benchmarked. The Remuneration Committee aims to set base salaries close to the median of those for similar positions within other biopharmaceutical companies of a similar size. Following their review in the first quarter of 2008, the Remuneration Committee awarded annual salary increases to the three Executive Directors of between 0% and 5.9% (2007: 8.9% and 10.1%).

Annual performance incentiveThe Group operates a discretionary bonus scheme. Such bonuses are awarded dependent upon performance, which is measured against individual and corporate objectives agreed at the beginning of the year, also taking into account the relative share price performance of the Company. Bonuses in 2008 were earned in respect of the 12-month period from 1 July 2007 to 30 June 2008. The maximum potential bonus for full achievement of personal and corporate objectives is 60% of salary for the Chief Executive Officer and 30% for other Executive Directors. For exceptional performance, as determined by the Remuneration Committee, the maximum potential bonus may be increased to 85% for the Chief Executive Officer and to 60% for other Executive Directors. Actual bonuses earned by the Executive Directors for the 12-month period to 30 June 2008, expressed as a percentage of basic salary over that period, were 75% (2007: 77%) for the Chief Executive Officer, 45% (2007: 56%) for the Chief Operating Officer and 45% (2007: 45%) for the Chief Financial Officer. The exceptional bonuses awarded this year reflect achievement of significant objectives, the acquisition of Xanthus Pharmaceuticals, Inc., progress in a number of development programmes and an improvement in the financial strength of the Group.

Deferred share bonus planThe Company is seeking shareholder approval at the forthcoming AGM to introduce a deferred share bonus arrangement. It is intended that this arrangement will provide the Remuneration Committee with greater flexibility with respect to incentivising and retaining key employees. It is envisaged that some employees who currently receive options under the 1998 Company Share Option Plan will instead participate in the deferred share bonus plan.

Report of the Board on remunerationThis part of the remuneration report is unaudited


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Longer-term incentivesThe Group’s current long-term incentive arrangements comprise an Executive Incentive Plan approved by shareholders in 2003 and a Company Share Option Plan, which was introduced in 1998 and which will expire in November 2008. Therefore, the Company is also seeking shareholder approval for a replacement share option plan, the 2008 Company Share Option Plan (the ‘2008 CSOP’). The Remuneration Committee has retained the use of Performance Awards under the Executive Incentive Plan established in 2003 as the principal long-term incentive for the Management Group to promote the achievement of sustained shareholder value creation. The Remuneration Committee considers that the grant of Performance Awards to members of the Management Group during the year is consistent with current best practice and promotes alignment of the interests of Executive Directors and senior managers with those of shareholders. Performance Awards are granted twice per year following the release of the Group’s preliminary year-end and interim (half-year) financial results. In prior years, awards have been made under the 1998 Company Share Option Plan (‘CSOP’); no such awards were made to the Executive Directors during the year ended 30 June 2008.

(a) Executive Incentive PlanThe Group adopted a long-term incentive and deferred bonus scheme following approval by shareholders in November 2003; this is known as the Executive Incentive Plan (the ‘Plan’ or ‘EIP’). For the year ended 30 June 2008 the Remuneration Committee has made awards to the Management Group and to other employees as Performance Awards under the Plan. A summary of the scheme is set out below:

Two types of award, Performance Awards and Matching Awards, may be made under the Plan. Performance Awards are shares that are delivered to an executive after three years, subject to the satisfaction of a pre-agreed performance target (see below) and continued employment. Matching Awards are free shares delivered to executives who invest part of their annual bonus in Company shares (‘Invested Shares’), subject to continued employment of not less than three years and the meeting of pre-agreed performance targets. Invested Shares will be limited in value to 33% of the executive’s salary each year.All employees of the Group are eligible to participate at the discretion of the Remuneration Committee.An award will normally vest no earlier than the third anniversary of its grant to the extent that the applicable performance condition (see below) has been satisfied, the participant is still employed by the Group and, in the case of Matching Awards, the Invested Shares have been retained. It will then remain capable of exercise for a period of three years.The value of Performance Awards granted under the Plan to current employees is currently limited to 2.0 times basic salary in any financial year. Performance Awards vest in full after three years provided that the Company’s Total Shareholder Return (‘TSR’) ranks in the upper quartile on the third anniversary of the date of grant compared with a selected list(1) of over 20 other UK-listed biotechnology and pharmaceutical companies drawn from the FTSE All Share Pharmaceutical and Biotechnology Index. Where the TSR ranks below median on the third anniversary the performance target will not have been met and the Performance Award will lapse. Where the TSR ranks between median and upper quartile the Performance Award will vest pro-rata between 25% and 100%. There will be no opportunity for retesting.The performance condition for Matching Awards will be similarly linked to the Company’s TSR ranking compared against the same list(1) of biotechnology and pharmaceutical companies. Where the TSR is ranked in the upper quartile then shares equal in number to the Invested Shares will be awarded. Where the TSR is ranked below median then no shares will be awarded. Where the TSR falls between median and upper quartile then the number of Matching Award shares will vest pro-rata between 25% and 100% of the number of Invested Shares.If the performance condition is achieved after three years the executive can decide to retain the Invested Shares for a fourth or fifth year, in which case the number of Matching Award shares may be adjusted upwards, but not downwards, up to a maximum of 150% of the Invested Shares for upper quartile performance at the end of five years. This is not viewed as retesting by the Remuneration Committee because if the performance condition is not satisfied after three years the Matching Award lapses.The Matching Award conditions encourage executives to retain their Invested Shares for at least five years and ensures that a Matching Award is only earned for sustained good TSR performance.If the Company is acquired then awards under the Plan will only vest at the date of change of control to the extent that the performance condition has been met and where, in the opinion of the Remuneration Committee, the acquiring company does not offer broadly similar replacement awards or where the employee is not retained by the acquiring company. Performance Awards were granted to Executive Directors and certain senior employees during the year as set out on pages 22, 23, 24, 50, 51 and 52.

The first Matching Awards were granted on 8 July 2005 in respect of bonuses earned by Executive Directors and certain other employees for the 12-month period ended 30 June 2005 and invested by them in Invested Shares. No Matching Awards have been granted subsequently. HNBS have independently verified to the Remuneration Committee that the TSR ranked in the upper quartile in respect of the initial performance period for the Matching Awards. Accordingly, 661,369 shares vested in the Executive Directors on 8 July 2008.

(b) 2008 CSOPAs stated above, the 2008 CSOP is intended to replace the 1998 CSOP which is due to expire shortly. The 2008 CSOP will also include a schedule under which it will be possible to grant US tax-favoured incentive stock options to employees in the USA. It is currently intended that the 2008 CSOP will only be used to deliver, where possible, tax-favourable options to eligible employees in the UK and in the USA.

(1) The selected list of comparator companies set for the Performance and Matching Awards in the period is: Acambis, Alizyme, Allergy Therapeutics, Ardana, Ark Therapeutics, Axis-Shield, CeNeS Pharmaceuticals, Futura Medical, Goldshield Group, GW Pharmaceuticals, Oxford BioMedica, Phytopharm, ProStrakan Group, Proteome Sciences, Protherics, Renovo, Shire Pharmaceuticals, Sinclair Pharma, SkyePharma, Summit (formerly VASTox,) Vectura and Vernalis.

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Report of the Board on remuneration continuedThis part of the remuneration report is unaudited


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Pensions and other benefitsThe Group operates a defined contribution scheme and contributes 12.5% of basic salary to the pension for each member of the Management Group. Other benefits include life and permanent health insurance. Car allowances are also provided to the Management Group.

Service contractsThe service contracts for the three Executive Directors (Glyn Edwards – dated 16 March 1998; Raymond Spencer – dated 1 October 1996; Ursula Ney – dated 23 February 2004):

Are not of a fixed-term duration. Are subject to 12 months’ notice by either party. The Group is entitled to pay a sum in lieu of notice equivalent to the basic salary that would have been earned during the notice period by Glyn Edwards and Raymond Spencer and equivalent to the basic salary plus benefits in the case of Ursula Ney.Are not subject to liquidated damages in the event of termination by the Group.

The 12-month notice period and termination provisions reflect the competitive environment for the retention of experienced executives in the biotechnology sector. Ursula Ney was appointed as a Non-Executive Director of Affibody Holding AB on 20 April 2007 and received Director’s fees of €20,000 per annum, which she was entitled to retain. Ursula Ney was also granted an option over 40,000 shares in Affibody Holding AB. Ursula Ney resigned this directorship on 18 June 2008. Glyn Edwards is on the board of the BioIndustry Association and derived no compensation from this position.

Non-Executive DirectorsRemuneration of Non-Executive Directors is determined by the Board and is set at levels which are comparable with those provided by other biotechnology companies of a similar size, taking into account the commitments made by Non-Executives in discharging their duties. Terms of service are specified into letters of appointment. Currently, appointments are for a period of three years, which may be renewed, and are subject to six months’ notice. The most recent date of appointment or re-appointment of Non-Executive Directors is 1 June 2006 for Barry Price, Grahame Cook and Michael Pappas, 9 December 2006 for Birgit Norinder, 13 September 2005 for Dale Boden and 9 July 2008 for Michael Lewis. Non-Executive Directors do not have service contracts. Ann Hacker resigned on 1 October 2007. Details of compensation paid to Directors and Directors’ interests are set out below.

Audited informationThe following information has been audited (except as noted).

Directors’ remunerationFull details of Directors’ remuneration and grants of share options are set out below: 2008 2007 Monetary Total Total Salary value of excluding 2008 excluding 2007 and fees Bonuses(1) benefits(2) pensions Pensions(3) pensions Pensions £’000 £’000 £’000 £’000 £’000 £’000 £’000

Glyn Edwards 305 229 14 548 38 497 35Ursula Ney(4) 269 120 13 402 34 403 31Raymond Spencer(4) 172 78 14 264 22 245 20Barry Price 50 – – 50 – 44 –Grahame Cook 37 – – 37 – 31 –Ann Hacker 19 – – 19 – 31 –Birgit Norinder 35 – – 35 – 27 –Michael Pappas 30 – – 30 – 24 –Dale Boden 37 – – 37 – 26 –

954 427 41 1,422 94 1,328 86

(1) Bonuses were paid in August 2008 in respect of the 12-month period from 1 July 2007 to 30 June 2008. (2) Executive Directors’ benefits include a car allowance and private health insurance. (3) Only Executive Directors’ basic salary is pensionable. Non-Executive Directors’ fees are non-pensionable. The aggregate emoluments of key management are given in Note 4.(4) Ursula Ney and Raymond Spencer waived entitlements to a part of their above discretionary bonus amounting to £72,000 and £50,000, respectively. The Company has agreed to

make one-off additional contributions to their pension plans of £79,200 and £55,000, respectively.

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Directors’ interests in shares (unaudited)The interests of the Directors in the shares of the Company on 30 June 2008, all of which were beneficially held, are set out below:

2008 2007 Ordinary shares of 1p each Number Number

Barry Price 743,077 643,077Glyn Edwards 2,140,000 1,519,962Ursula Ney 645,391 645,391Raymond Spencer 603,231 603,231Grahame Cook 1,125,540 1,125,540Michael Pappas 751,785 602,005Dale Boden 774,003(1) 713,823

(1) Dale Boden’s total holdings include a beneficial interest totalling 638,469 ordinary Antisoma shares held by BF Capital, BFC III Ltd and by The Sentinel I Trust.

Other than shown in the tables above, no Director had any interest in the shares of the Company or of other Group companies at 30 June 2008. Note 31 provides details of transactions with Directors.

Two Non-Executive Directors, Michael Pappas and Dale Boden, elected to take a proportion of their fees in new Antisoma plc 1p ordinary shares. The Directors have agreed not to dispose of these shares for a minimum period of one year from the date of allotment.

Interests in share optionsDetails of options held by Directors to purchase Antisoma plc ordinary 1p shares are set out below:

Date At Granted At Price per from which Expiration Date of grant 30.06.07 in the year 30.06.08 share exercisable (iv) date

Glyn Edwards CSOP Options 16.12.98 486,241 486,241 74p 17.12.98(i) 16.12.0809.07.99 432,214 432,214 43p (ii),(iii) 09.07.0909.06.00 170,410 170,410 £1.01 10.06.03 09.06.1019.09.00 17,540 17,540 £1.43 20.9.03 19.09.1013.02.01 58,981 58,981 £2.12 14.02.04 13.02.1117.09.01 289,331 289,331 38p 18.09.04 17.09.1116.04.02 855,827 855,827 21p 17.04.05 16.04.1223.09.02 1,452,074 1,452,074 12p 24.09.05 23.09.1220.02.03 425,006 425,006 26p 21.02.06 20.02.1301.10.03 418,359 418,359 38p 02.10.06 01.10.1316.02.04 457,053 457,053 43p 17.02.07 16.02.14 21.09.04 359,452 359,452 14p 22.09.07 21.09.1421.02.05 868,871 868,871 22p 22.02.08 21.02.15

EIP Performance Awards 20.09.05 419,302 419,302 1p 21.09.08 20.09.1124.02.06 521,946 521,946 1p 25.02.09 24.02.1219.10.06 742,841 742,841 1p 20.10.09 19.10.1220.02.07 434,276 434,276 1p 21.02.10 20.02.1315.09.07 690,241 690,241 1p 16.09.10 15.09.1326.02.08 534,621 534,621 1p 27.02.11 26.02.14

Total 8,409,724 1,224,862 9,634,586

Report of the Board on remuneration continued


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Ursula Ney CSOP Options23.02.04 752,676 752,676 45p 24.02.07 23.02.1421.09.04 235,278 235,278 14p 22.09.07 21.09.1421.02.05 568,715 568,715 22p 22.02.08 21.02.15

EIP Performance Awards20.09.05 286,650 286,650 1p 21.09.08 20.09.1124.02.06 355,725 355,725 1p 25.02.09 24.02.1219.10.06 529,443 529,443 1p 19.10.09 19.10.1220.02.07 309,520 309,520 1p 21.02.10 20.02.1315.09.07 479,773 479,773 1p 16.09.10 15.09.13 26.02.08 371,605 371,605 1p 27.02.11 26.02.14

Total 3,038,007 851,378 3,889,385


Raymond SpencerCSOP Options16.12.98 216,107 216,107 74p 17.12.98(i) 16.12.0816.12.98 129,664 129,664 74p (i),(iii) 16.12.0809.07.99 216,107 216,107 43p (ii),(iii) 09.07.0909.06.00 87,639 87,639 £1.01 10.06.03 09.06.1019.09.00 35,098 35,098 £1.43 20.09.03 19.09.1013.02.01 9,436 9,436 £2.12 14.02.04 13.02.1117.09.01 124,991 124,991 38p 18.09.04 17.09.1116.04.02 388,887 388,887 21p 17.04.05 16.04.1223.09.02 659,822 659,822 12p 24.09.05 23.09.1220.02.03 193,123 193,123 26p 21.02.06 20.02.1301.10.03 182,556 182,556 38p 02.10.06 01.10.1316.02.04 199,441 199,441 43p 17.02.07 16.02.1421.09.04 156,852 156,852 14p 22.09.07 21.09.1421.02.05 379,143 379,143 22p 22.02.08 21.02.15

EIP Performance Awards 20.09.05 189,067 189,067 1p 21.09.08 20.09.1124.02.06 232,097 232,097 1p 25.02.09 24.02.12 19.10.06 334,953 334,953 1p 19.10.09 19.10.12 20.02.07 195,818 195,818 1p 21.02.10 20.02.1315.09.07 307,779 307,779 1p 16.09.10 15.09.1326.02.08 238,387 238,387 1p 27.02.11 26.02.14

Total 3,930,801 546,166 4,476,967

Incentive Plan Invested Shares/Matching Awards Date Date of Invested Potential Matching Award Exercise from which Expiration award Shares 08.07.08 08.07.10 price exercisable date

Glyn Edwards 08.07.05 337,835 337,835 506,752 1p 09.07.08 08.07.11Ursula Ney 08.07.05 195,391 195,391 293,086 1p 09.07.08 08.07.11Raymond Spencer 08.07.05 128,143 128,143 192,214 1p 09.07.08 08.07.11

The above Matching Awards were granted on 8 July 2005.

Notes: All options were granted at nil cost. No other Directors have share options in the shares of the Company or other Group companies. No options were exercised by the Directors and no options lapsed or were surrendered during the year other than as stated above.

0

25

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75

100

125

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30 June 200830 June 200730 June 200630 June 200530 June 200430 June 2003

Antisoma FTSE All Share Pharmaceuticals and Biotech Index

Valu

e (£

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Total shareholder return

This graph shows the value, by the end of June 2008, of £100 invested in Antisoma on 30 June 2003 compared with the value of £100 invested in the FTSE All Share Pharmaceuticals and Biotechnology Index. The other points plotted are the values at intervening financial year-ends.

Source: Thomson Financial


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Performance conditionsPerformance conditions attaching to all the Performance Awards and Matching Awards are consistent with the policy set out in the Report of the Board on remuneration. Performance and exercise conditions attaching to the CSOP options are set out below:(i) These options were granted on the day prior to the Company’s flotation, and exercise of these options is conditional upon the Company’s

ordinary shares being listed on the London Stock Exchange or other regulated market. This condition has been satisfied. The market price of the Company’s shares upon flotation was 35p.

(ii) Conditional upon securing a commercial agreement in respect of the Group’s then lead product. This condition was satisfied in October 1999.

(iii) One quarter of the total number of shares under option are exercisable at the date of grant. One quarter of the total number of shares under option become exercisable on each of the first, second and third anniversaries of the date of grant.

(iv) CSOP options granted in 2000 and 2001 may be exercised provided that the market price of the shares exceeds the exercise price by at least 52% at any time between the third and tenth anniversary of the date of grant. CSOP options granted in 2002 to 2005 may be exercised provided that the market price of the shares exceeds the exercise price by at least 52% on the third anniversary of the date of grant or, failing that, the performance condition may be retested at six-monthly intervals on four further occasions up to and including the fifth anniversary of the date of grant, but in this case the performance condition is raised such that the share price is required to increase by a further 15% per annum over the extra period allowed for each successive test. If the exercise condition is met once during this period it need not be met again. If the performance condition is not met by the fifth anniversary then the option will lapse. No CSOP options have been granted to Executive Directors in 2008. The market price of the Company’s shares at 30 June 2008 was 23p (30 June 2007: 43.75p) on the London Stock Exchange (‘LSE’) and the range of market prices during the year was between 20.5p and 45.5p.

Total shareholder return (unaudited)Total shareholder return looks at the value of £100 invested in Antisoma plc on 30 June 2003 over the period to 30 June 2008 compared with £100 invested in the FTSE All Share Pharmaceutical and Biotechnology Index, which the Directors believe provides the most appropriate comparison of the return to shareholders of Antisoma plc with the return represented by an index of other companies in its sector.

This report has been approved by the Board and signed on its behalf by:

Dale BodenChairman of the Remuneration Committee26 September 2008

Report of the Board on remuneration continued


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The Group seeks to follow best practice in corporate governance and, other than the formation of a Nominations Committee, has complied throughout the year with the best-practice provisions of the Combined Code. This report, together with the Report of the Board on remuneration, sets out the manner in which the Group has applied the principles contained in the Combined Code.

Board of DirectorsResponsibilities of the Board include setting the Group’s strategic aims and objectives, helping to ensure that the necessary resources are available for their achievement, approval of operating plans, budgets and forecasts and the review of the performance of the business against objectives, approval of acquisitions, other major business matters and policies, review and approval of reporting to shareholders, reviewing performance of management and ensuring the maintenance of internal controls to assess and manage financial and operational risks. Additionally, the Board reserves for itself matters concerning Board and other senior executive appointments.

The Directors bring a range of relevant expertise and experience to the Board. As at 30 June 2008, the Board of Directors comprised: a Non-Executive Chairman, Barry Price (who is also a Non-Executive Director of Shire Pharmaceuticals plc and Chairman of Summit plc, four additional Non-Executive Directors, Grahame Cook, Birgit Norinder, Dale Boden and Michael Pappas, of whom the first three are regarded as independent; and three Executive Directors, Glyn Edwards, Raymond Spencer and Ursula Ney. Ann Hacker was an independent Non-Executive Director until her resignation on 1 October 2007. All Non-Executive Directors bring an independent judgement to Board deliberations and decisions. As noted on page 22, as at 30 June 2008, Barry Price had a beneficial interest in 743,077 shares, Grahame Cook had a beneficial interest in 1,125,540 shares and Dale Boden had an interest in 774,003 shares. Since 30 June 2008, Michael Pappas has acquired an additional 16,304 ordinary shares and Dale Boden an additional 20,108 ordinary shares in lieu of Director’s fees. No other Directors have acquired an additional interest in the ordinary shares or share options of the Company since 30 June 2008. In the opinion of the Board these shareholdings do not impair their independent status. As stated in Note 31, Michael Pappas has a relationship with Leventis Holdings SA, which has been a major shareholder of the Company since its foundation. Barry Price, Michael Pappas and Grahame Cook have each been on the Board for over nine years. The Board does not consider the above factors impair their independence of character or judgement. Michael Pappas is not formally regarded as an independent Non-Executive Director. Biographical details of Directors are provided on pages 12 and 13.

The current Senior Independent Director is Grahame Cook, who has recent financial experience.

All Directors have direct access to the services and advice of the Company Secretary, who is also the Group Legal Adviser. The Company Secretary is responsible for ensuring compliance with relevant procedures, rules and regulations. The Board as a whole determines the appointment and removal of the Company Secretary. Directors may, at the Company’s expense, seek independent legal advice on any matter relating to the discharge of their duties.

There were eight scheduled Board meetings during the year, which were fully attended, with the exception of one meeting at which Michael Pappas was unable to be present. Appropriate information for the business to be conducted is provided in advance of Board meetings. The Directors may make further enquiries, as they deem appropriate. The Chairman holds meetings with the Non-Executive Directors without the Executive Directors. The Senior Independent Director additionally holds meetings with the other Non-Executive Directors, without the Chairman present, to appraise the Chairman’s performance.

New Non-Executives receive an introduction to the business, meeting with senior executives for detailed discussions on the activities of the Group. Relevant training seminars have been attended by various Board members to assist in their further professional development.

The Board has evaluated its own performance and that of its Audit and Remuneration Committees on a broad range of issues including structure, functionality and meeting of objectives, conduct of meetings, corporate governance and relationships with shareholders. The results of these evaluations have been discussed and the Senior Independent Director has been charged with responsibility for implementing any recommendations for change. The Non-Executive Directors, led by the Senior Independent Director, are responsible for performance evaluation of the Chairman, taking into account the views of Executive Directors. The performance of the Chief Executive is reviewed by the Chairman and discussed with the Remuneration Committee by reference to achievement of individual and Company objectives. The performance of other Executive Directors is reviewed and monitored by the Chief Executive and discussed with the Chairman and Remuneration Committee. It is the Board’s intention to conduct these reviews on an annual basis.

The Board delegates certain other responsibilities to the Audit and Remuneration Committees, the terms of reference of which, may be found on the Company’s website at www.antisoma.com.

Board committeesThe Audit Committee is chaired by Grahame Cook. Birgit Norinder and Dale Boden were also members during the year, as was Ann Hacker until her resignation on 1 October 2007. The terms of reference for the Audit Committee include responsibility for monitoring the integrity and compliance of the financial statements, for reviewing significant financial judgements contained therein and for ensuring that arrangements for the independent audit of the annual report and accounts and review of interim financial statements are appropriate and effective. The Audit Committee also reviews the internal financial control systems, treasury management procedures and controls and, together with the Board, risk management systems. Meetings of the Audit Committee were held three times during the year and were fully attended, with the Company’s external auditors and the Chief Financial Officer attending as appropriate. The Audit Committee conducted a self-assessment of its performance by reference to an evaluation checklist. The Chair of the Audit Committee is nominated as the person to whom any financial or other matters of impropriety (‘whistle-blowing’) may be reported. The Audit Committee reviews and approves the engagement letters and scope for every piece of work carried out by the auditors and is satisfied with the auditors’ statement regarding independence and conflicts of interest. The Audit Committee is satisfied that the nature and extent of non-audit services does not impair auditor objectivity or independence. Details of the amounts paid to the external auditors during the year for audit and non-audit services are set out in the notes to the financial statements on page 40.

Corporate governance


26

The Remuneration Committee makes recommendations to the Board regarding the compensation policy and strategy for the Group as a whole and specifically for Executive Directors and senior management. It is also responsible for the grant of options under the Company Share Option Plan and Executive Incentive Plan. It is composed entirely of independent Non-Executive Directors and chaired by Dale Boden. Grahame Cook and Birgit Norinder were also members during the year as was Ann Hacker until her resignation on 1 October 2007. The Report of the Board on remuneration is set out on pages 19 to 24. Meetings of the Remuneration Committee were held four times during the year and were fully attended, with other members of the Board attending as appropriate.

The Board has considered that, because of the Company’s small size, it has not been appropriate to have a separate Nominations Committee (required under provision A.4.1 of the Code) and reserved for itself responsibility for the appointment of new Directors under the leadership of the Non-Executive Chairman. The Chairman received nominations for new Directors and made recommendations to the Board, applying objective criteria to selection of Board candidates to ensure that new members have brought a balance of skills and experience. All Board members provide input to the process for any appointment. Where appropriate, candidates have been selected using external search consultants. The Board believes that these procedures were formal, rigorous, transparent and inclusive and comply with the principles of the Combined Code. Following the increase in size of the Group as a result of the acquisition of Xanthus, the Board has decided it is now appropriate to establish a Nominations Committee.

Attendance at Board meetings and committeesThe Directors attended the following Board meetings and committees: Audit Remuneration Board Committee Committee meetings meetings meetings

Barry Price 8/8 n/a n/aGlyn Edwards 8/8 n/a n/aRaymond Spencer 8/8 n/a n/aUrsula Ney 8/8 n/a n/aGrahame Cook 8/8 3/3 4/4Michael Pappas 7/8 n/a n/aAnn Hacker (resigned 1 October 2007) 3/3 2/2 2/2Birgit Norinder 8/8 3/3 4/4Dale Boden 8/8 3/3 4/4

Relationship with shareholdersThe Company is committed to maintaining good relations with its shareholders through the provision of financial updates, interim and annual reports, press releases, presentations at conferences, through its website www.antisoma.com and through meeting with shareholders in general meetings. Individual meetings between Executive Directors and significant institutional shareholders are also arranged.

The Board takes steps to ensure that its members develop an understanding of the views of major shareholders. This is achieved through feedback from meetings between management and significant shareholders and feedback from the Company’s brokers and financial advisors. Non-Executive Directors together with the Chairman of the Board and the Executive Directors meet with shareholders at the AGM. Shareholders are invited to ask questions and to meet with Directors after the formal proceedings have ended. The Senior Independent Director is available to shareholders if contact through the normal channels is inappropriate or has failed to resolve concerns.

Internal control and risk managementThe Board has overall responsibility for ensuring that the Group maintains adequate systems of internal control. Such systems are designed to manage, rather than eliminate, risks and therefore can only provide reasonable and not absolute assurance against material misstatement or loss.

The Group has established a formal process which accords with the Turnbull guidance for identifying and evaluating the significant risks faced by the Group and carries out a comprehensive risk assessment at least annually. The Board regularly reviews the system of internal controls and the effectiveness of risk identification and evaluation, updating the risk assessment as appropriate. This review process has been in place throughout the year up to the date of approval of the Annual Report and Accounts and covers risk management and controls of financial, operational and regulatory matters. The Group has reviewed its internal financial controls and also carried out operational risk assessments and reviewed insurance provisions. On the recommendation of the Audit Committee, taking into account the close involvement of the Chief Financial Officer and other Executive Directors in the management and supervision of the Group’s financial affairs and the Group’s relatively small size, the Board does not consider it appropriate to have an internal audit function.

The BioIndustry Association Code of Best PracticeThe UK BioIndustry Association, of which Antisoma plc is a member, published a code in 2000 to establish principles of best practice for information communication and management amongst its members. An updated edition was published in 2006. The principles support and extend the Company’s duty to publish and communicate information in a fair, equal and balanced manner. The Board is committed to providing quality dialogue with investors and other interested parties and confirms that the Group has complied with the code for the year under review.

Going concernAs at 30 June 2008 the Company and Group had cash and liquid resources of approximately £66.9 million, which are sufficient to meet the requirements of the business for at least the next 12 months. Accordingly, the Directors have adopted the going concern basis in preparing the financial statements.

Corporate governance continued


27

Statement of Directors’ responsibilities in respect of the Annual Report, the Report of the Board on remuneration and the financial statementsThe Directors are responsible for preparing the Annual Report, the Report of the Board on remuneration and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group and Company financial statements in accordance with International Financial Reporting Standards (‘IFRSs’) as adopted by the European Union. The financial statements are required by law to give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.

In preparing those financial statements, the Directors are required to:select suitable accounting policies and then apply them consistently;make judgements and estimates that are reasonable and prudent;state that the financial statements comply with IFRSs as adopted by the European Union; and prepare the financial statements on the going concern basis, unless it is inappropriate to presume that the Group will continue in business.

The Directors confirm that they have complied with the above requirements in preparing the financial statements.

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements and the Report of the Board on remuneration comply with the Companies Act 1985 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the Company’s website and legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

So far as each Director is aware, there is no relevant audit information of which the Company’s auditors are unaware. Each Director has taken all the steps that he or she ought to have taken in his or her duty as a Director in order to make himself or herself aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.

By order of the Board

Kevin KissaneCompany Secretary26 September 2008

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28

We have audited the Group and parent Company financial statements (the ‘financial statements’) of Antisoma plc for the year ended 30 June 2008 which comprise the Consolidated income statement, the Consolidated statement of recognised income and expense, the Consolidated and Company balance sheets, the Consolidated and Company cash flow statements and the related notes. These financial statements have been prepared under the accounting policies set out therein. We have also audited the information in the Report of the Board on remuneration that is described as having been audited.

Respective responsibilities of Directors and auditorsThe Directors’ responsibilities for preparing the Annual Report, the Report of the Board on remuneration and the financial statements in accordance with applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union are set out in the Statement of Directors’ Responsibilities.

Our responsibility is to audit the financial statements and the part of the Report of the Board on remuneration to be audited in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). This report, including the opinion, has been prepared for and only for the Company’s members as a body in accordance with Section 235 of the Companies Act 1985 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial statements and the part of the Report of the Board on remuneration to be audited have been properly prepared in accordance with the Companies Act 1985 and, as regards the Group financial statements, Article 4 of the IAS Regulation. We also report to you whether in our opinion the information given in the Directors’ Report is consistent with the financial statements. The information given in the Directors’ Report includes that specific information presented in the Joint Chief Executive and Chairman’s statement that is cross referred from the Business review section of the Directors’ Report, that specific information presented in the Report of the Board on remuneration that is cross referred from the Directors’ interests section of the Directors’ Report, that specific information that is presented in Financial review and the Joint Chief Executive and Chairman’s statement that is cross referred from the Financial and Non-Financial Key Performance Indicators (KPIs) section of the Directors’ Report and that specific information presented in the Report of the Board on remuneration that is cross referred from the Additional information for shareholders section of the Directors’ report.

In addition we report to you if, in our opinion, the Company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding Directors’ remuneration and other transactions is not disclosed.

We review whether the Corporate Governance Statement reflects the Company’s compliance with the nine provisions of the Combined Code (2006) specified for our review by the Listing Rules of the Financial Services Authority, and we report if it does not. We are not required to consider whether the Board’s statements on internal control cover all risks and controls, or form an opinion on the effectiveness of the Group’s corporate governance procedures or its risk and control procedures.

We read other information contained in the Annual Report and consider whether it is consistent with the audited financial statements. The other information comprises only the Directors’ Report, the unaudited part of the Report of the Board on remuneration, the Highlights, the Joint Chief Executive and Chairman’s statement, the Financial review, Board of Directors, the Corporate social responsibility review, the portfolio summary, the Corporate governance statement and the List of advisors. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information.

Basis of audit opinionWe conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and the part of the Report of the Board on remuneration to be audited. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Group’s and Company’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements and the part of the Report of the Board on remuneration to be audited are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements and the part of the Report of the Board on remuneration.

OpinionIn our opinion:

the Group financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union, of the state of the Group’s affairs as at 30 June 2008 and of its profit and cash flows for the year then ended;the parent company financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union as applied in accordance with the provisions of the Companies Act 1985, of the state of the parent company’s affairs as at 30 June 2008 and cash flows for the year then ended;the financial statements and the part of the Report of the Board on remuneration to be audited have been properly prepared in accordance with the Companies Act 1985 and, as regards the Group financial statements, Article 4 of the IAS Regulation; andthe information given in the Directors’ Report is consistent with the financial statements.

PricewaterhouseCoopers LLPChartered Accountants and Registered AuditorsLondon26 September 2008

•

•

•

•

Independent auditors’ report to the members of Antisoma plc


29

Consolidated income statementfor the year ended 30 June 2008

2008 2007 Notes £’000 £’000

Revenue 2 39,527 7,956

Researchanddevelopmentexpenditure (18,432) (14,511)Administrativeexpenses (10,297) (7,324)

Totaloperatingexpenses 6 (28,729) (21,835)

Operating profit/(loss) 10,798 (13,879)Financeincome 5 2,578 1,176

Profit/(loss) before taxation 13,376 (12,703)Taxation 7 (1,047) 2,953

Profit/(loss) for the year 26 12,329 (9,750)

Earnings/(loss) per ordinary shareBasic 9 2.7p (2.4)p

Diluted 9 2.6p (2.4)p

Allamountsarisefromcontinuingoperations.

Consolidated statement of recognised income and expensefor the year ended 30 June 2008

2008 2007 Notes £’000 £’000

Profit/(loss) for the year 12,329 (9,750)Exchangetranslationdifferenceonconsolidation 27 (235) (1,638)

Total recognised gain/(expense) for the year 12,094 (11,388)


30

Consolidated balance sheetas at 30 June 2008

2008 2007 Notes £’000 £’000

AssetsNon-current assetsGoodwill 10 5,559 5,523Intangibleassets 11 47,149 19,065Property,plantandequipment 12 2,358 485Deferredtaxasset 16 – 750

55,066 25,823

Current assetsTradeandotherreceivables 14 2,113 2,460Currenttaxreceivable – 2,011Short-termdeposits 18 33,000 10,000Cashandcashequivalents 18 33,861 51,414

68,974 65,885LiabilitiesCurrent liabilitiesTradeandotherpayables 15 (9,866) (7,492)Currenttaxpayable (297) –Deferredincome 17 (5,401) (31,905)Provisions 19 (629) (341)

Net current assets 52,781 26,147

Total assets less current liabilities 107,847 51,970

Non-current liabilitiesDeferredtaxliabilities 16 (5,559) (5,523)Provisions 19 (81) (168)

(5,640) (5,691)

Net assets 102,207 46,279

Shareholders’ equitySharecapital 20 10,467 8,795Sharepremium 23 119,629 100,451Sharestobeissued 24 2,273 –Otherreserves 25 37,996 18,571Profitandlossaccount 26 (68,158) (81,538)

Total shareholders’ equity 102,207 46,279

Thefinancialstatementsonpages29to57wereapprovedbytheBoardofDirectorson26September2008andweresignedonitsbehalfby:

Barry PriceDirector


31

Company balance sheetas at 30 June 2008

2008 2007 Notes £’000 £’000

AssetsNon-current assetsInvestmentsinsubsidiaries 13 74,659 49,945Tradeandotherreceivables 14 128,662 110,357

203,321 160,302

Current assetsTradeandotherreceivables 14 9 10

LiabilitiesCurrent liabilitiesTradeandotherpayables 15 (225) (111)

Net current liabilities (216) (101)

Net assets 203,105 160,201

Shareholders’ equitySharecapital 20 10,467 8,795Sharepremium 23 119,629 100,451Sharestobeissued 24 2,273 –Otherreserves 25 64,894 45,234Profitandlossaccount 26 5,842 5,721

Total shareholders’ equity 203,105 160,201

Thefinancialstatementsonpages29to57wereapprovedbytheBoardofDirectorson26September2008andweresignedonitsbehalfby:

Barry PriceDirector


32

Consolidated cash flow statementfor the year ended 30 June 2008

2008 2007 Notes £’000 £’000

Cash flows from operating activitiesProfit/(loss)fortheyear 12,329 (9,750)Adjustmentsfor: Interestreceivable (2,578) (1,176) Taxcharge/(credit) 1,047 (2,953) Impairmentofacquiredintellectualpropertyrights – 144 Depreciationofpropertyplantandequipment 213 321 Share-basedpayments 1,051 893

Operatingcashflowsbeforemovementinworkingcapital 12,062 (12,521)Decrease/(increase)intradeandotherreceivables 961 (1,500)(Decrease)/increaseintradeandotherpayables (28,506) 34,323

Cashgeneratedfrom/(usedin)operations (15,483) 20,302Interestreceived 2,753 1,144Researchanddevelopmenttaxcreditreceived 2,011 2,092

Netcash(usedin)/generatedfromoperatingactivities (10,719) 23,538

Cash flows from investing activitiesPurchaseofproperty,plantandequipment (1,969) (188)Purchaseofintangibleassets (1,605) (1,839)(Purchase)/saleofshort-termdeposits (23,000) (4,494)Netcashoutflowinrespectofacquisitions 28 (237) –

Netcash(usedin)/generatedfrominvestingactivities (26,811) (6,521)

Cash flows from financing activitiesProceedsfromissueofordinarysharecapital 20,966 26,503Expensespaidinconnectionwithissueofordinarysharecapital 27 (980) (1,518)

Netcashgeneratedfromfinancingactivities 19,986 24,985

Net(decrease)/increaseincashandcashequivalents (17,544) 42,002Exchangegains/(losses)oncashandbankoverdrafts (9) –Cashandcashequivalentsatbeginningofyear 51,414 9,412

Cash and cash equivalents at end of year 33,861 51,414


33

Company cash flow statementfor the year ended 30 June 2008

2008 2007 Notes £’000 £’000

Cash flows from operating activities(Loss)/profitfortheyear (930) 404Adjustmentforinterestreceivable (608) (1,177)

Operatingcashflowsbeforemovementinworkingcapital (1,538) (773)Increaseintradeandotherreceivables (18,304) (25,444)Increaseintradeandotherpayables 114 56

Cashgeneratedfrom/(usedin)operations (19,728) (26,161)Financeincome 608 1,176

Netcash(usedin)/generatedfromoperatingactivities (19,120) (24,985)

Cash flows from investing activitiesAcquisitionexpenses (866) –

Netcash(usedin)/generatedfrominvestingactivities (866) –

Cash flows from financing activitiesProceedsfromissueofordinarysharecapital 20,966 26,503Expensespaidinconnectionwithissueofordinarysharecapital 27 (980) (1,518)

Netcashgeneratedfromfinancingactivities 19,986 24,985

Net(decrease)/increaseincashandcashequivalents – –Cashandcashequivalentsatbeginningofyear – –

Cash and cash equivalents at end of year – –


34

Notes to the consolidated financial statements

1. Principal accounting policiesTheprincipalaccountingpoliciesadoptedinthepreparationofthesefinancialstatementsaresetoutbelow.

TheCompanyisapubliclimitedcompanyincorporatedanddomiciledintheUnitedKingdom,withitsregisteredofficeatChiswickParkBuilding5,566ChiswickHighRoad,London,W45YF.

Basis of preparationThesefinancialstatementshavebeenpreparedbyAntisomaplcinaccordancewithInternationalFinancialReportingStandards(‘IFRS’),asadoptedforusebytheEU,andInternationalFinancialReportingInterpretationCommitteeinterpretations(‘IFRIC’)andwiththosepartsoftheCompaniesAct1985applicabletocompaniesreportingunderIFRS.

Adoption of new accounting standardsThefollowingIFRS,IFRICinterpretationsandamendmentshavebeenadoptedinlinewiththetransitionalguidanceofeachstandard:

IFRS7–‘FinancialInstruments:Disclosures’,andthecomplementaryamendmenttoIAS1–‘PresentationofFinancialStatements’issuedinAugust2005,requiretheGrouptodiscloserevisedandadditionaldisclosures.ThisimplementationhashadnoimpactontheresultsornetassetsoftheGrouporCompany.

InJuly2006,theIASBissuedIFRIC10–‘InterimFinancialReportingandImpairment’Thisinterpretationrequiresthatanyimpairmentlossrecognisedinrespectofgoodwilloranequityinvestmentinaquarterlyinterimstatementshallnotsubsequentlybereversedinsubsequentquarterlyorannualstatements.ThisimplementationhashadnoimpactontheresultsornetassetsoftheGrouporCompany.

IFRIC11,IFRS2–‘GroupandTreasuryShareTransactions’,issuedinNovember2006,providesguidanceonwhethershare-basedtransactionsinvolvingGroupentitiesshouldbeaccountedforasequitysettledorcashsettledtransactions.ThisimplementationhashadnoimpactontheresultsornetassetsoftheGrouporCompany.

IFRIC8‘ScopeofIFRS2’addressestheissueofwhetherIFRS2–‘Share-BasedPayment’appliestotransactionsinwhichtheentitycannotidentifyspecificallysomeorallofthegoodsorservicesreceived.ThisstandarddoesnothaveanyimpactontheresultsornetassetsoftheGrouporCompany.

Thefollowingstandards,amendmentsandinterpretationseffectiveintheGroupaccountsfrom1July2007arenotrelevanttotheoperationsoftheGroup:

IFRS4,‘InsuranceContracts’.IFRIC7,‘ApplyingtherestatementapproachunderIAS29,Financialreportinginhyper-inflationaryeconomies’.IFRIC9,‘Re-assessmentofembeddedderivatives’.IFRIC15‘AgreementsfortheConstructionofRealEstate’.IFRIC16‘HedgesofaNetInvestmentinaForeignOperation’.

Future announcementsThefollowingIFRSandIFRICinterpretations,whicharerelevanttotheGroup,havebeenissuedbytheInternationalAccountingStandardsBoard(‘IASB’)butarenotyeteffective.NoneislikelytohaveamaterialeffectontheGroup’sresultsofoperationsorfinancialposition.

InNovember2006,theIASBissuedIFRS8–‘OperatingSegments’whichisrequiredtobeimplementedinthefinancialyearcommencing1July2009.ThisalignstheIFRSreportingofsegmentalanalysiswiththatprovidedinaccordancewithUSGAAPandrequiressegmentalanalysisreportedbyanentitytobebasedoninformationusedbymanagement.

InMarch2007theIASBissuedIAS23Amendment:BorrowingCosts,anamendmenttoIAS23,whichrequiresanentitytocapitaliseborrowingcostsdirectlyattributabletotheacquisition,constructionorproductionofaqualifyingasset(onethattakesasubstantialperiodoftimetogetreadyforuseorsale)aspartofthecostofthatasset.Theoptionofimmediatelyexpensingthoseborrowingcostshasbeenremoved.ThischangeintreatmentshouldbeappliedprospectivelyintheGroup’sannualperiodsbeginning1July2009.

ThefollowinginterpretationsarenotyeteffectiveandnotrelevantfortheGroup’soperations:IFRIC12,‘Serviceconcessionagreements’.IFRIC13,‘Customerloyaltyprogrammes’.IFRIC14,‘IAS19–Thelimitonadefinedbenefitasset,minimumfundingrequirementsandtheirinteraction’.IFRIC15‘AgreementsfortheConstructionofRealEstate’.IFRIC16‘HedgesofaNetInvestmentinaForeignOperation’.

Use of estimates and judgementsThepreparationoffinancialstatementsinaccordancewithIFRSrequirestheuseofcertaincriticalaccountingestimates.Italsorequiresmanagementtoexercisejudgementintheprocessofapplyingtheaccountingpolicies.TheNotestothefinancialstatementssetoutareasinvolvingahigherdegreeofjudgementorcomplexity,orareaswhereassumptionsaresignificanttothefinancialstatementssuchasintangibleassets(Note11).Althoughtheseestimatesarebasedonmanagement’sbestknowledgeoftheamount,eventoractions,actualresultsultimatelymaydifferfromthoseestimates.

Thefinancialstatementsarepreparedinaccordancewiththehistoricalcostconvention.

•••••

•••••


35

1. Principal accounting policies continuedBasis of consolidationTheconsolidatedfinancialstatementsincludethefinancialinformationoftheCompanyandallitssubsidiaryundertakings.

TheacquisitionofAntisomaResearchLimitedwasabusinesscombinationinvolvingentitiesundercommoncontrol.ThefinancialstatementsofAntisomaResearchLimitedhavebeenconsolidatedusingtheprinciplesof‘mergeraccounting’.Theprinciplesofmergeraccountingarethattheassetsandliabilitiesoftheacquiredcompanyarenotrestatedtofairvalue,nogoodwillarisesandtheconsolidatedfinancialinformationincorporatesthecombinedcompanies’resultsasifthecompanieshadalwaysbeencombined.

InlinewiththeprovisionsofIFRS1,acquisitionscompletedbefore1July2004havenotbeenaccountedforunderIFRS3.Instead,thehistoricalUKGAAPaccountingtreatmenthasbeenretained.

AllothersubsidiarieshavebeenconsolidatedusingtheprinciplesofacquisitionaccountingunderIFRS3.UnderIFRS3,theresultsofacquiredsubsidiariesareincludedintheconsolidatedincomestatementfromthedatethattheyareacquired.Thecostofanacquisitionisthefairvalueofconsideration,includingcostsdirectlyattributabletotheacquisition.Allofthesubsidiary’sassetsandliabilitiesthatexistatthedateofacquisitionarerecordedattheirfairvalues.TheexcessofthecostofacquisitionoverthefairvalueoftheCompany’sshareoftheidentifiablenetassetsacquiredisrecordedasgoodwill.

AccountingpoliciesofsubsidiarieshavebeenchangedwherenecessarytoensureconsistencywiththepoliciesadoptedbytheGroup.

Intra-grouptransactions,profitsandbalancesareeliminatedinfullonconsolidation.

Business combinationsAcquisitionsofsubsidiariesandbusinessesareaccountedforusingthepurchasemethod.Thecostofthebusinesscombinationismeasuredastheaggregateofthefairvalues(atthedateofexchange)ofassetsgiven,liabilitiesincurredorassumed,andequityinstrumentsissuedbytheGroupinexchangeforcontroloftheacquiree,plusanycostsdirectlyattributabletothebusinesscombination.Theacquiree’sidentifiableassets,liabilitiesandcontingentliabilitiesthatmeettheconditionsforrecognitionunderIFRS3BusinessCombinationsarerecognisedattheirfairvaluesattheacquisitiondate.Iftheconditionsofsection131oftheCompaniesAct1985aremet,mergerreliefistakenontheissueofsharesandamergerreserveisrecognised.

Goodwillarisingonacquisitionisrecognisedasanassetandinitiallymeasuredatcost,beingtheexcessofthecostofthebusinesscombinationovertheGroup’sinterestinthenetfairvalueoftheidentifiableassets,liabilitiesandcontingentliabilitiesrecognised.If,afterreassessment,theGroup’sinterestinthenetfairvalueoftheacquiree’sidentifiableassets,liabilitiesandcontingentliabilitiesexceedsthecostofthebusinesscombination,theexcessisrecognisedimmediatelyinprofitorloss.

Theinterestofminorityshareholdersintheacquireeisinitiallymeasuredattheminority’sproportionofthenetfairvalueoftheassets,liabilitiesandcontingentliabilitiesrecognised.

GoodwillGoodwillarisingonconsolidationrepresentstheexcessofthefairvalueofconsiderationoverthefairvalueofidentifiablenetassetsacquired.Goodwillisrecognisedasanassetandreviewedforimpairmentatleastannuallyandwheneverthereisanindicatorofimpairment.Impairmentlossesinrespectofgoodwillarenotreversed.AspermittedbyIFRS1,goodwillwrittenoffpriortotransitiontoIFRShasnotbeenreinstatedasanassetandwillnotbeincludedindetermininganysubsequentprofitorlossondisposal.SeeNote10foradetaileddescriptionoftheimpairmentreviewthatiscarriedout.

Intangible fixed assetsIntangiblefixedassetsotherthangoodwill,whichcompriselicences,productrightsandinprocessresearchanddevelopment,arerecordedattheirfairvaluesatacquisitiondate(ifacquiredaspartofabusinesscombination)orcost(ifacquiredseparately)andareamortisedonastraight-linebasisovertheirestimatedusefuleconomiclivesfromthetimetheyareavailableforuse.Whereaproductisatarelativelyearlystageofdevelopmentthefullcostofthelicencesorrightspurchasedarecapitalisedbutnotamortiseduntilthatproductisavailableforuse.SubsequentmilestonepaymentsmadebytheGrouptothelicensorarealsocapitalisedasandwhentheyaremade.Annualmaintenancechargespaidperthetermsofthelicenceagreementareexpensedinadministrativecostsastheyareincurred.

Assetsthatarenotyetavailableforusearenotsubjecttoamortisationandaretestedatleastannuallyforimpairmentorwheneverthereisanindicatorofimpairment.Assetsthataresubjecttoamortisationarereviewedforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamountmaynotberecoverable.Animpairmentlossisrecognisedintheincomestatementfortheamountbywhichtheasset’scarryingvalueexceedsitsrecoverableamount.Forthepurposeofassessingimpairment,assetsaregroupedatthelowestlevelsforwhichthereareseparatelyidentifiablecashflows(cash-generatingunits).Therecoverableamountisthehigherofanasset’sfairvaluelesscoststosellandvalueinuse.Inassessingvalueinuse,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheasset.SeeNote11foradetaileddescriptionoftheimpairmentreviewthatiscarriedout.


36

Notes to the consolidated financial statements continued

1. Principal accounting policies continuedImpairmentIncarryingoutimpairmentreviewsofgoodwill,intangibleandtangibleassets,anumberofsignificantassumptionshavetobemadewhenpreparingcashflowprojections.Theseincludethelikelihoodofsuccessofclinicaltrials,thelikelihoodofregulatoryapproval,themilestonepaymentsreceivable,futureratesofmarketgrowth,themarketdemandfortheproducts,thefutureprofitabilityoftheproducts,andthelongevityoftheproductsinthemarket.Ifactualresultsshoulddifferorchangesinexpectationsarise,impairmentchargesmayberequiredwhichwouldmateriallyimpactonoperatingresults.DetailsofimpairmentreviewscanbeseeninNotes10and11.

Property, plant and equipmentProperty,plantandequipmentareheldatcostlessaccumulateddepreciationandanyimpairmentinvalue.Depreciationisprovidedtowriteoffthecostorvaluation,lessestimatedresidualvalues,ofallproperty,plantandequipment,overtheirexpectedusefullives.Itiscalculatedonastraight-linebasisatthefollowingrates:Officeequipment 15%perannumComputers–officeandlaboratory 33%perannumOfficefixturesandfittings 33%perannumLaboratoryfixturesandfittings 20%perannumLaboratoryequipment–owned 20%perannumLaboratoryequipment–leased 20%perannum

Animpairmentlossisrecognisedfortheamountbywhichanasset’scarryingamountexceedsitsrecoverableamount.Therecoverableamountisthehigherofanasset’sfairvaluelesscoststosellandvalueinuse.

Cash and cash equivalentsCashandcashequivalentscomprisecashinhandanddepositswithbanksthathaveamaturityofthreemonthsorlessfromthedateofinception.

Depositsthathaveamaturitygreaterthanthreemonthsbutlessthanayearfromthedateofinceptionhavebeendisclosedseparatelyasshort-termdeposits.

Trade and other payablesTradeandotherpayablesareinitiallyrecognisedatfairvalueandsubsequentlystatedatamortisedcost.

ProvisionsProvisionsarerecognisedwhentheGrouphasapresentlegalorconstructiveobligationasaresultofpasteventsanditisprobablethatanoutflowofresourceswillberequiredtosettletheobligation.ProvisionsaremeasuredattheDirectors’bestestimateoftheexpenditurerequiredtosettletheobligationatthebalancesheetdateandarediscountedtopresentvaluewheretheeffectismaterial.Provisionsarenotrecognisedforfutureoperatinglosses.

TaxationDeferredincometaxisprovidedinfull,usingtheliabilitymethod,ontemporarydifferencesarisingbetweenthetaxbasesofassetsandliabilitiesandtheircarryingamountsintheconsolidatedfinancialstatementsinaccordancewithIAS12–‘Incometaxes’.Deferredtaxliabilitiesaregenerallyrecognisedforalltaxabletemporarydifferences,anddeferredtaxassetsaregenerallyrecognisedforalldeductibletemporarydifferencestotheextentthatitisprobablethattaxableprofitswillbeavailableagainstwhichthosedeductibletemporarydifferencescanbeutilised.Suchassetsandliabilitiesarenotrecognisedifthetemporarydifferencearisesfromgoodwillorfromtheinitialrecognition(otherthaninabusinesscombination)ofotherassetsandliabilitiesinatransactionthataffectsneitherthetaxableprofitnortheaccountingprofit.

DeferredtaxassetsandliabilitiesareoffsetwhenthereisalegallyenforceablerighttosetoffcurrenttaxassetsagainstcurrenttaxliabilitiesandwhentheyrelatetoincometaxesleviedbythesametaxationauthorityandtheGroupintendstosettleitscurrenttaxassetsandliabilitiesonanetbasis.

Research and Development Tax CreditsTheGroupmakesclaimseachyearforResearchandDevelopmentTaxCreditsand,whenitislossmaking,electstotakethecashequivalentamount.TheGroupaccruesfortheexpectedcashequivalentamountforeachyearintothatyear’sfinancialstatements.

Operating leasesLeasesinwhichasignificantportionoftherisksandrewardsofownershipareretainedbythelessorareclassifiedasoperatingleases.Paymentsinrespectofoperatingleasesarechargedonastraight-linebasistotheincomestatementovertheleaseterm.

RevenueRevenue,whichexcludesvalueaddedtax,representsthefairvalueofconsiderationreceivableinrespectofgoodsandservicessupplied.TheGroup’sbusinessstrategyincludesenteringintocollaborativelicenceanddevelopmentagreementswithbiotechnologyandpharmaceuticalcompaniesforthedevelopmentandcommercialisationoftheGroup’sproductcandidates.Thetermsoftheagreementshistoricallyhaveincludednon-refundablelicencefees,fundingofresearchanddevelopment,paymentsbasedontheachievementofclinicaldevelopmentmilestones,androyaltiesonproductsales.Incertaininstancestheagreementshaveincludedthesaleofexclusiveoptionsonfuturecompoundsandsharesubscriptionagreements.


37

1. Principal accounting policies continuedRevenuearisingfromcollaborativeagreementsconsistingofmultipleelementsisallocatedtothoseelementsinaccordancewithcontractualterms,whichareindicativeofthefairvaluesoftheindividualelements.Significantmanagementjudgementisrequiredindeterminingwhether,insubstance,elementsofsuchcontractsoperateindependentlyofotherelementsandwhethertheyshouldthereforebeaccountedforseparately.Revenueinrespectofeachseparableelement(or,wherenoelementsareseparable,inrespectofthecontractasawhole)arespreadovertheperiodoverwhichtheGroupisexpectedtocompleteitsserviceobligationsunderanarrangement.Intheabsenceofamorerationalbasisonwhichsuchmilestonesmayberecognised,up-frontmilestonesaretypicallyrecognisedonastraight-linebasisovertheperformanceperiod.Inparticular,iftheGroupisinvolvedinasteeringcommitteeaspartofamultipleelementarrangement,theGroupassesseswhetheritsinvolvementconstitutesanobligationorarighttoparticipate.Steeringcommitteeservicesthatareconsideredsignificantobligationsarecombinedwithotherresearchserviceobligationsrequiredunderanarrangement,ifany,indeterminingthelevelofeffortrequiredinanarrangementandtheperiodoverwhichtheGroupexpectstocompleteitsobligations.

Amountsreceivedorreceivableunderresearchanddevelopmentcontractsandcollaborativeresearchagreementsarerecognisedasrevenueintheperiodinwhichtherelatedcostsareincurredorservicesareprovided.ThesecontributionstowardscostsincurredarereceivedwheretheGroupistheprincipalinthetransaction,andassuchtheseamountshavebeenrecordedgrossasrevenueandnotnettedagainstcostsincurred.Asrevenuerepresentscontributionstowardscostsincurred,noamountshavebeenallocatedtocostofsales;insteadallcostsrelatingtothesedevelopmentprogrammesarerecordedasresearchanddevelopmentexpenditure.

Non-refundablelicencefeesandpaymentsontheachievementofdevelopmentmilestonesarerecognisedasrevenuewhentheGrouphasacontractualrighttoreceivesuchpayment,theamountcanbemeasuredreliably,itisprobablethattheeconomicbenefitsassociatedwillflowtotheGroup,andwhenthespecificconditionsstipulatedinthelicenceagreementshavebeensatisfied.

Royaltyrevenueistoberecogniseduponthesaleoftherelatedproducts,providedthattheroyaltyamountsarereliablymeasurable,itisprobablethebenefitswillbereceived,andtheGrouphasnoremainingobligationsunderthearrangement.

AmountsreceivableasoptionfeestoaccesstheGroup’sintellectualpropertyarespreadovertheoptionperiod.

Research and development expenditureResearchanddevelopmentexpenditureiscurrentlywrittenofftotheincomestatementasitisincurred.DuetotheregulatoryandotheruncertaintiesinherentinthedevelopmentoftheGroup’sproducts,thecriteriafordevelopmentcoststoberecognisedasanasset,asprescribedbyIAS38–‘Intangibleassets’,arenotmetuntiltheproducthasbeensubmittedforregulatoryapprovalandwhenitishighlyprobablethatfutureeconomicbenefitswillflowtotheGroup.TheGroupdoesnotcurrentlyhaveanyinternaldevelopmentcoststhatqualifyforcapitalisationasintangibleassets.

Financial instrumentsForwardexchangecontractsandforeignexchangeoptionsarerevaluedtofairvaluewithnetunrealisedgainsandlossesrecordedintheincomestatement.TheGroupdoesnotemployhedgeaccounting.TheGroupdidnothaveinexistenceanyforwardexchangecontractsat30June2008.

Foreign currencyThefunctionalcurrencyofeachGroupentityisthecurrencyoftheprimaryeconomicenvironmentinwhichtheentityoperates.TransactionsdenominatedinforeigncurrencieshavebeentranslatedintothefunctionalcurrencyoftheGroupentityatmonthendratesofexchange.Monetaryassetsandliabilitiesdenominatedinforeigncurrencieshavebeentranslatedatratesrulingatthebalancesheetdate.Exchangedifferenceshavebeentakentooperatingresultsintheincomestatement.

TheresultsofforeignoperationsaretranslatedintotheGroup’spresentationalcurrencyatmonth-endexchangeratesandtheirbalancesheetsaretranslatedattheratesrulingatthebalancesheetdate.Exchangedifferencesarisingontranslationoftheopeningnetassetsandresultsofoverseasoperationsaredealtwiththroughreserves.

InpreparingtheGroup’sfinancialstatements,theBoardmakesjudgementsinrelationtothedeterminationofthefunctionalcurrencyofeachofitsundertakings.InrespecttoitsUKtradingsubsidiary,asubstantialpartofitsexpensesaredenominatedinGBPound.WhiletherevenuesofthesubsidiaryundertheNovartisagreementareprincipallydenominatedinUSdollars,theBoardconsiderstheeconomicenvironmentthatmainlyinfluencesrevenuestobeglobalratherthansolelythatoftheUS.Furthermore,historicallytheGrouphasretainedthemajorityofitscashandshort-terminvestmentbalancesinGBPound,exceptasnecessarytomeetanticipatedliabilitiestosuppliersrequestingpaymentsinUSdollars.AlthoughtheGroupmayfromtimetotimemaintainsubstantialmonetaryassetsinothercurrencies,ithasdeterminedthatGBPoundisthefunctionalcurrencyforitsUKtradingsubsidiary.


38


1. Principal accounting policies continuedPension costsRetirementbenefitstoemployeesandDirectorsareprovidedbydefinedcontributionpensionschemes.TheassetsoftheseschemesareheldseparatelyfromthoseoftheGroupinindependentlyadministeredfunds.ContributionsmadebytheGrouparechargedtotheincomestatementintheperiodtowhichtheyrelate.

Share capitalOrdinarysharesareclassifiedasequity.Incrementalcostsattributabletotheissueofnewsharesoroptionsareshowninequityasadeduction,netoftax,fromtheproceeds.

Share optionsInaccordancewithIFRS2–‘Share-basedpayment’,shareoptionsaremeasuredatfairvalueattheirgrantdate.Thefairvalueischargedonastraight-linebasistotheincomestatementovertheexpectedvestingperiod.NationalInsurancepayableontheexerciseofshare-basedpaymentsistreatedasacash-settledshare-basedpaymentunderIFRS2andtheGroupmakeschargestotheincomestatementbasedonanestimateoftheNationalInsuranceliabilityinrespectoftheoutstandingawardsateachperiodend.WheretheNationalInsuranceliabilityisvirtuallycertaintoberecoveredfromtherelevantemployeesacorrespondingreceivableamountisalsorecognisedintheincomestatement.Detailsoftheassumptionsusedincalculatingtheshare-basedpaymentchargearedetailedinNote22.

2. Segmental informationPrimary reporting segment – business segmentTheDirectorsareoftheopinionthatunderIAS14–‘Segmentalinformation’theGrouphasonlyonebusinesssegment,beingdrugdevelopment.

Secondary reporting segment – geographical segmentTheGroup’sgeographicalsegmentsaredeterminedbylocationofoperations.

AllrevenuehasbeenderivedfromexternalcustomerslocatedinEurope.TheprincipalsourcesofrevenuefortheGroupinthetwoyearsended30June2008were: 2008 2007 £’000 £’000

Recognitionofupfrontandmilestonepaymentsonatimeapportionedbasis: Novartis 38,806 6,592 Other 265 647R&Dservicesandmaterialsrecharged: Novartis 456 717

Total revenues 39,527 7,956

Thefollowingtableshowsthecarryingvalueofsegmentassetsbylocationofassets: 2008 2007 £’000 £’000

Total assets/(liabilities)UK 80,430 46,500US 21,777 (221)

Total 102,207 46,279

Totalassetsareallocatedbasedonwheretheassetsarelocated.

Thefollowingtableshowsthecostsintheperiodtoacquireproperty,plant,equipmentandintangiblesbylocationofassets:

2008 2007 £’000 £’000

Capital expenditureUK 3,574 2,027US 26,900 –

Total 30,474 2,027

Capitalexpenditureisallocatedbasedonwheretheassetsarelocated.


39

3. Directors’ emolumentsDirectors’emolumentsreceivablebyDirectorsofAntisomaplcfromAntisomaGroupcompaniesareasfollows: 2008 2007 £’000 £’000

Aggregate emolumentsEmolumentsandbenefits 1,422 1,328Pensioncosts 94 86

Highest-paid DirectorEmolumentsandbenefits 548 497Pensioncosts 38 35

ThethreeExecutiveDirectorshaveretirementbenefitsaccruingtothemthroughdefined-contributionschemes,inrespectofqualifyingservices.

DetailedinformationconcerningDirectors’remunerationandinterestsinshareoptionsissetoutintheReportoftheBoardonremunerationonpages19to24.

TheDirectorsmadegainsof£nil(2007:£nil)inrelationtotheexerciseofshareoptions.

4. Employee informationTheaveragenumberofpersons(includingExecutiveDirectors)employedbytheGroupduringtheyearwas: 2008 2007

By activityAdministration 27 21Researchanddevelopment 44 38

71 59

Theemployeebenefitexpenserecordedintheaccountsisasfollows: 2008 2007 £’000 £’000

Staff costsWagesandsalaries 5,858 4,716Socialsecuritycosts 730 582Pensioncosts(seeNote32) 434 342Terminationpayments 363 –Share-basedpayments 1,051 893

8,436 6,533

Terminationpaymentsinclude£316,000relatingtotheclosureoftheMontrealoffice(seeNote6).

KeyManagementCompensation(includedinstaffcosts)(includeseight(2007:six)seniormanagersandthree(2007:three)ExecutiveDirectors)was: 2008 2007 £’000 £’000

Salariesandshort-termemployeebenefits 2,597 1,988Pensioncosts 221 170Share-basedpayments 730 607

3,548 2,765

TheCompanyhasnilemployees(2007:nilemployees).

5. Finance income 2008 2007 £’000 £’000

InterestreceivableOnshort-termdeposits 2,007 151Oncashandcashequivalents 571 1,025

2,578 1,176


40


6. Operating profit/(loss)Thefollowingitemshavebeenchargedinarrivingattheoperatingprofit/(loss): 2008 2007 £’000 £’000

Depreciationontangibleownedproperty,plantandequipment 213 321Amortisationofintangiblefixedassets – 144Hireofplantandmachinery–operatingleases 25 8Hireofotherassets–operatingleases 351 480Netforeignexchangedifferences 464 867Restructuringcosts 476 –Auditors’remuneration(seebelow) 784 263

Therestructuringcostsareincludedinadministrativeexpensesandcomprise£316,000redundancypaymentsand£160,000otherrestructuringcostsrelatingtotheclosureoftheMontrealoffice. 2008 2007 £’000 £’000

Auditors’ remunerationAuditservices FeespayabletoCompanyauditorfortheauditoftheCompanyandconsolidatedaccounts 43 29Non-auditservicesFeespayabletotheCompany’sauditoranditsassociatesforotherservices: TheauditofCompany’ssubsidiariespursuanttolegislation 30 15 OtherServicespursuanttolegislation 671 83 Taxservices 40 11Servicesrelatingtocorporatefinancetransactionsenteredintoorproposedtobeenteredintobyor onbehalfoftheCompanyoranyofitsassociates – 125

784 263

Other services provided by the Group’s auditorsThetermsofreferencefortheAuditCommitteeincluderesponsibilityformonitoringtheintegrityandcomplianceofthefinancialstatements,forreviewingsignificantfinancialjudgementscontainedthereinandforensuringthatarrangementsfortheindependentauditoftheannualreportandaccountsandreviewofinterimfinancialstatementsareappropriateandeffective.TheAuditCommitteereviewsandapprovestheengagementlettersandscopeforeverypieceofworkcarriedoutbytheauditorsandissatisfiedwiththeauditcompany’sstatementregardingcomplianceandconflictsofinterest.TheAuditCommitteeissatisfiedthatthenatureandextentofnon-auditservicesdoesnotimpairauditorobjectivityorindependence.

Oftheservicesabove£148,000hasbeenincludedinthecostofacquisition,and£121,000relatestofundraisingexpensesandhasbeenincludedinthesharepremiumaccount.

7. Taxation 2008 2007 £’000 £’000

Currenttax 297 (2,203)Deferredtax 750 (750)

Total tax charge/(credit) for the period 1,047 (2,953)

Thechargefortheyearcanbereconciledtotheprofitpertheconsolidatedincomestatementasfollows: 2008 2007 £’000 £’000

Profit/(loss)onordinaryactivitiesbeforetaxation 13,376 (12,703)

Profit/(loss)onordinaryactivitiesmultipliedbythestandardrateofUKcorporationtaxat29.5%(2007:30%) 3,945 (3,811)Effectsof: Timingdifferencesbetweendepreciationandcapitalallowancescharged (532) 58 Expensesnotdeductiblefortaxpurposes (38) 204 Lossescarriedforward/(utilised)orsurrenderedforR&Dtaxcredits (3,375) 3,549Deferredtaxassetmovement 750 (750)PrioryearResearchandDevelopmenttaxcredit – (192)CurrentyearResearchandDevelopmenttaxcredit – (2,011)Taxchargeoninterestincome 297 –

Total tax charge/(credit) for the period 1,047 (2,953)

DuringtheyeartheUKCorporationTaxratesreducedfrom30%to28%effectivefrom1April2008.Theeffectiverateof29.5%hasbeencalculatedbasedontheserates,pro-ratedovertheyear.


41

7. Taxation continuedThedeferredtaxassetof£750,000createdintheprioryearhasbeenreleasedintheyearending30June2008sincethisisnolongerconsideredrecoverable.

At30June2008,theGrouphadtaxlossesavailableforcarryforwardinexcessof£88million(2007:£66million)subjecttoagreementwiththerelevanttaxauthorities.

8. Company loss/(profit) for the financial yearAspermittedbysection230oftheCompaniesAct1985,theparentcompany’s(the‘Company’s’)incomestatementhasnotbeenincludedwiththesefinancialstatements.TheresultsfortheCompanyarepresentedunderIFRS.

TheCompany’sresultforthefinancialyearwasalossof£930,000(2007:profitof£404,000).

TheCompanyhasnootherrecognisedincomeorexpenseintheyearthatdidnotpassthroughtheincomestatement;henceaStatementofRecognisedIncomeandExpensehasnotbeenpreparedfortheCompany.

9. Earnings/(loss) per shareBasicearningspersharearecalculatedbydividingtheearningsattributabletoordinaryshareholdersbytheweightedaveragenumberofordinarysharesinissueduringtheperiod.

Fordilutedearningspershare,theweightedaveragenumberofordinarysharesinissueisadjustedtoassumeconversionofalldilutivepotentialordinaryshares.TheserepresentshareoptionsgrantedtoemployeeswheretheexercisepriceislessthantheaveragemarketpriceoftheCompany’sordinarysharesduringtheyearended30June2008,anddeferredconsiderationsharesrelatingtotheacquisitionofXanthusPharmaceuticals,Inc. 2008 2007

Earnings/(loss)fortheyear(£’000) 12,329 (9,750)Weightedaveragenumberofshares(’000) 455,649 413,756

Basic earnings/(loss) per ordinary share 2.7p (2.4)p

2008 2007

Earnings/(loss)fortheyear(£’000) 12,329 (9,750)Weightedaveragenumberofshares(’000) 455,649 413,756Adjustmentsfor:–shareoptions(’000) 19,269 ––deferredconsiderationshares(’000) 523 –Weightedaveragenumberofshares(’000) 475,441 413,756

Diluted earnings/(loss) per ordinary share 2.6p (2.4)p

Intheyearended30June2007,theGrouphadnodilutivepotentialordinarysharesinissuebecauseitwaslossmaking.

10. GoodwillGroup 2008 2007 £’000 £’000

CostAsat1July 5,523 6,133Additions – –Revaluationduetochangesinforeignexchangerates 36 (610)

As at 30 June 5,559 5,523

Accumulated impairment lossesAsat1July – –Impairmentlossesfortheyear – –

As at 30 June – –

Net book value at 30 June 5,559 5,523


42


10. Goodwill continuedTheGrouptestsgoodwillannuallyforimpairmentormorefrequentlyifthereareindicationsthatgoodwillmightbeimpaired.Duringtheyear,theacquiredgoodwillinrespectofAntisoma,Inc.wastestedforimpairmentinaccordancewithIAS36.Thistestresultedinnoimpairmentofthegoodwill.InordertotesttheimpairmentofthegoodwillinrespectofAntisoma,Inc.adiscountedcashflowmodelwascreatedforAS1411,theproductacquiredwithAntisoma,Inc.Anumberofsignificantassumptionshavetobemadewhenpreparingcashflowprojections.ThediscountedcashflowlooksatallfuturecashoutflowsforAS1411suchasclinicaltrialcostsandmarketingandsalescosts,andalsolooksatcashinflowsfrommilestonepaymentsandroyalties(basedonestimatedpenetrationlevelsandestimatedpriceineachtargetmarketandmarketgrowthratesof1%).Cashflowsareconsideredovertheperiodto2024.Ifactualcashflowsshoulddiffer,orchangesinexpectationsarise,impairmentchargesmayberequiredwhichwouldmateriallyimpactonoperatingresults.ThesecashflowsarethenprobabilityweightedbasedonthestageofdevelopmentofAS1411usingstandardindustryprobabilityfactors.AllthecashflowsarethendiscountedusingtheGroup’spre-taxweightedaveragecostofcapitalof14%asappliedtodevelopmentproducts.IfthetotalnetpresentvalueisinexcessoftheintangiblebookvalueofAS1411(seeNote11)plusthegoodwillthennoimpairmentismadetothegoodwill.Thistestresultedinnoimpairmentofthegoodwill.

Noreasonablylikelychangeinakeyassumptionwouldhavegivenrisetoanimpairmentofgoodwill.

CompanyTheCompanyhasnogoodwill.

11. Intangible assetsGroup Licences Aptamera Xanthus andproduct Intellectual Intellectual rights Property Property Total £’000 £’000 £’000 £’000

CostAt1July2006 3,207 17,289 – 20,496Additions 1,839 – – 1,839Revaluationduetochangesinforeignexchangerates – (1,638) – (1,638)

At30June2007 5,046 15,651 – 20,697

Additions 1,605 – – 1,605Acquisitions – – 26,781 26,781Revaluationduetochangesinforeignexchangerates – 101 (403) (302)

At30June2008 6,651 15,752 26,378 48,781

AmortisationAggregateamortisationandimpairmentat1July2006 1,488 – – 1,488Impairmentchargefortheyear 144 – – 144

At30June2007 1,632 – – 1,632

Impairmentchargefortheyear – – – –

At30June2008 1,632 – – 1,632

Net book amount at 30 June 2008 5,019 15,752 26,378 47,149

Netbookamountat30June2007 3,414 15,651 – 19,065

TheGrouptestsintangibleassetsthathavenotyetbeenbroughtintouseannuallyforimpairment,ormorefrequentlyifthereareindicationsthatintangibleassetsmightbeimpaired.

TheintangibleassetshavenotbeenamortisedastheproductsarenotsufficientlyclosetomarkettobeconsideredtohavebeenbroughtintouseandthereforesubjecttoamortisationunderIAS38.

Incarryingoutimpairmentreviewsofintangibleassets,anumberofsignificantassumptionshavetobemadewhenpreparingcashflowprojections.Theseincludethelikelihoodofsuccessofclinicaltrials,thelikelihoodofregulatoryapproval,themilestonepaymentsreceived,futureratesofmarketgrowthestimatedat1%,themarketdemandfortheproducts,thefutureprofitabilityoftheproducts,thelongevityoftheproductsinthemarketandcostofcapital.Cashflowsareconsideredovertheperiodto2024.Ifactualcashflowsshoulddiffer,orchangesinexpectationsarise,impairmentchargesmayberequiredwhichwouldmateriallyimpactonoperatingresults.Thesecashflowsarethenprobabilityweightedbasedonthestageofdevelopmentofeachproductusingstandardindustryprobabilityfactors.AllthecashflowsarethendiscountedusingtheGroup’spre-taxweightedaveragecostofcapitalof14%asappliedtodevelopmentproducts.

Thecarryingvalueofintangibleassetsisreducedtonetrealisablevaluewherethereisanindicationofimpairmentsuchaswhenproductcandidatesarenolongerbeingdeveloped.Suchchargesaremadetoadministrativecostsintheincomestatement.

Noreasonablylikelychangeinakeyassumptionwouldhavegivenrisetoanimpairmentofintangibleassets.

Therehasbeennoamortisationexpenseinrelationtotheintangibleassetsfortheyear.


43

11. Intangible assets continuedCompanyTheCompanyhasnointangiblefixedassets.

12. Property, plant and equipmentGroup Office Laboratory computers, computers, equipment, Computers, equipment, fixturesand laboratory fixturesand fittings equipment fittings (owned) (leased) (owned) Total £’000 £’000 £’000 £’000

CostAt1July2006 864 161 1,900 2,925Additionsatcost 38 – 150 188Disposals (3) – (3) (6)

At30June2007 899 161 2,047 3,107

Additionsatcost 1,700 – 269 1,969Acquisitions 89 – 30 119Disposals (277) – (712) (989)Exchangemovement (19) – (6) (25)

At30June2008 2,392 161 1,628 4,181

DepreciationAt1July2006 797 161 1,349 2,307Chargefortheyear 37 – 284 321Disposals (3) – (3) (6)

At30June2007 831 161 1,630 2,622

Chargefortheyear 93 – 120 213Disposals (277) – (712) (989)Exchangemovement (17) – (6) (23)

At30June2008 630 161 1,032 1,823

Net book amount at 30 June 2008 1,762 – 596 2,358

Netbookamountat30June2007 68 – 417 485

Thoseassetswhichareclassifiedasleasedassetsareonsecondaryleasesforwhichapeppercornrentispaid.AllotherleaseshavebeenreviewedbytheGrouponthebasisofIAS17–‘Leases’andareclassifiedasoperatingleases.

CompanyTheCompanyhasnotangiblefixedassets.

13. InvestmentsCompany 2008 2007 £’000 £’000

Cost and valuation of interests in Group undertakingsAsat1July 49,945 49,052Additions 23,663 –Capitalcontributionsinrespectofshare-basedpayments 1,051 893

Asat30June 74,659 49,945

TheadditionrelatestothepurchaseofXanthusPharmaceuticals,Inc.(seeNote28).

Theshare-basedpaymentchargesrelatetotheshareoptionsgrantedintheCompanyonbehalfofemployeesofAntisomaResearchLtd.


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13. Investments continuedInterests in Group undertakings %of nominalvalue Countryof ofissuedNameofundertaking incorporation Descriptionofsharesheld sharesheld Principalbusinessactivity

AntisomaResearchLtd GreatBritain 1p‘A’ordinaryand£1 100 Developmentandcommercialisation redeemablepreference ofpotentialtherapeuticproducts forthetreatmentofcancerSpringFallLtd GreatBritain 1pordinary 100 DormantCancerTherapeuticsLtd GreatBritain £1‘A’ordinaryand 100 Dormant 25p‘B’ordinaryAntisomaDevelopments GreatBritain £1ordinaryshares 100 Dormant Limited(formerlyXanthus EuropeLtd)Antisoma,Inc. UnitedStates US$0.001 100 Developmentandcommercialisation ofAmerica ofpotentialtherapeuticproducts forthetreatmentofcancerXanthusPharmaceuticals,Inc. UnitedStates US$0.001 100 Developmentandcommercialisation ofAmerica ofpotentialtherapeuticproducts forthetreatmentofcancerTheranostics,Inc. Canada CAD$0.01 100 Developmentandcommercialisation ofpotentialtherapeuticproducts forthetreatmentofcancerXanthusSecurities,Inc. UnitedStates US$0.01 100 Investingentityestablishedunder ofAmerica Massachusettslaw

14. Trade and other receivablesGroup 2008 2007 £’000 £’000

Otherreceivables 632 939Prepaymentsandaccruedincome 1,481 1,521

2,113 2,460

Company 2008 2007 £’000 £’000

Non-currentAmountsowedbyGroupundertakings 128,662 110,357

CurrentPrepaymentsandaccruedincome 9 10

128,671 110,367

TherearenofixedrepaymenttermsinrespectoftheamountsowedbyGroupundertakings,whichrepresentthefundingofongoingresearchanddevelopmentrequirements.

TheGroupconsidersthatthecarryingamountoftradeandotherreceivablesapproximatestheirfairvalue.

15. Trade and other payables – currentGroup 2008 2007 £’000 £’000

Tradepayables 3,055 3,672Othertaxandsocialsecurity 271 383Accruals 6,540 3,437

9,866 7,492


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15. Trade and other payables – current continuedCompany 2008 2007 £’000 £’000

Accruals 225 111

TheGroupconsidersthatthecarryingamountoftradeandotherpayablesapproximatestheirfairvalue.

16. Deferred taxGroup 2008 2007 £’000 £’000

Deferredtaxpayableat1July (5,523) (6,133)Revaluationduetochangesinforeignexchangerates (36) 610

Deferred tax payable at 30 June (5,559) (5,523)

Deferredtaxreceivableat1July 750 –Movementindeferredtaxreceivable (750) 750

Deferred tax receivable at 30 June – 750

ThedeferredtaxpayablerelatestointangibleassetsrecognisedontheacquisitionofAntisoma,Inc.in2005.Theamountrecognisedisnetofdeferredtaxreceivablesonbroughtforwardlossesarisinginthesametaxjurisdiction.ThemovementinthedeferredtaxpayablerelatestotherestatementofthedollarvalueoftheAntisoma,Inc.balancesheet.

Adeferredtaxreceivableof£750,000hasbeenreversedintheyearsincethisisnolongerconsideredrecoverable.

Deferredtaxreceivablesandpayablesareonlyoffsetwherethereisalegallyenforceablerightofoffsetandthereisanintentiontosettlethebalancesnet.

From1April2008theUKCorporationTaxratereducedfrom30%to28%;thereforearateof28%hasbeenappliedtothisyear’sdeferredtaxbalances.

Nootherprovisionsfordeferredtaxhavebeenmadeinothertaxjurisdictionsasitisprobablethatnoliabilitywillariseintheforeseeablefutureduetotheavailabilityoftaxlosses.Theamountunprovidedofthetotalpotentialliability/(asset)isasfollows:

Group 2008 2007 £’000 £’000

Tax effect of timing differencesExcessofcapitalallowancesclaimedoverdepreciationcharged 596 91Othershort-termtimingdifferences (8) (11)Chargeforemployeeshareoptionsinexcessofamountsvested (949) (683)Lossescarriedforward (24,861) (17,493)

(25,222) (18,096)

CompanyNoprovisionfordeferredtaxhasbeenmadeasitisprobablethatnoliabilitywillariseintheforeseeablefutureduetotheavailabilityoftaxlossesthatcanbeGrouprelieved.Nodeferredtaxassetshavebeenrecognisedasthereisinsufficientcertaintyoffuturetaxableprofits.

17. Deferred incomeGroup 2008 2007 £’000 £’000

Deferredincome<1year 5,401 31,905

Thedeferredincomebalancerelatestotheupfrontpaymentof£38.2millionfromNovartis,receivedinApril2007,andthemilestonepaymentof£12.6millionfromNovartis,receivedinMay2008,whicharebeingrecognisedonatime-apportionedbasisovertheperiodto31August2008inlinewithourrevenuerecognitionpolicy.

CompanyTheCompanyhasnonon-currentliabilities.


46


18. Financial instrumentsThefinancialrisksfacedbytheGroupincludeliquidityrisk,interestraterisk,creditriskandcurrencyrisk.TheBoardreviewsandagreespoliciesformanagingeachoftheserisks.Whereappropriate,theGroupusesderivativefinancialinstrumentstoreduceexposuretoforeignexchangerisk;itdoesnotusederivativefinancialinstrumentsfortradingpurposes.

TheGroup’smainobjectivesinusingfinancialinstrumentsarethemaximisationofreturnsfromfundsheldondepositwhilemaintainingcreditriskatacceptablelevelsand,whenappropriate,thegenerationofadditionalcashresourcesthroughfinancingarrangementsforcapitalassetsandtheissueofshares.TheGroupalsoconsiderswhethertouseforwardcontractsinordertomanagethecashflowriskassociatedwithforeigncurrencyrevenuesandpurchases.

Liquidity riskTheGroup’spolicyistoraisecashinadvanceofwhenitisrequiredandwhenmarketconditionsareappropriate,usingthosefinancialinstrumentsthatcanbenegotiatedwiththeprovidersoffinanceatthattime.Itisalsotoensurethatsufficientcashbalancesshouldbeheldascashandcashequivalentstomeetliabilitiesastheyfalldue.

Interest rate riskTheGroupreceivesinterestfromcashondepositandthelevelofthisinterestisdependentuponprevailinginterestrates.TheGroupseekstomaximisethereceiptofinterestsubjecttoacceptablelevelsofcreditrisk.

Credit riskTheGroupplacesfundsondepositonlywithfinancialinstitutionswhohaveahighcreditratinganddoesnotplaceadisproportionateamountoffundswithanysinglefinancialinstitution.

Generally,themaximumcreditriskexposureoffinancialassetsisthecarryingamountofthefinancialassetsasshownonthefaceofthebalancesheet(orinthedetailedanalysisprovidedinthenotestothefinancialstatements).Creditrisk,therefore,isonlydisclosedincircumstanceswherethemaximumpotentiallossdifferssignificantlyfromthefinancialasset’scarryingamount.

Currency riskTheGroup’sresultsandliquidityareaffectedbyfluctuationsinforeigncurrencyexchangerates,principallyinrespecttotheUSdollar.AsubstantialpartofitsexpenseactivitiesandcapitalexpendituresareinbothGBPoundandUSdollars,whereasitsrevenue(currentandpotential)fromlicensingagreementsis,andisexpectedtobe,primarilyinUSdollars.

Additionally,theGrouphashistoricallymaintainedabalanceofUSdollardepositsinordertomeetcertainanticipatedexpenditureinUSdollars.TheGrouphaspurchasedandsoldUSdollarsatspotandforwardratestomaintainthisbalanceasappropriate.Asaresultoftheabove,anysignificantmovementsintheexchangeratebetweenGBPoundandUSdollarmayhaveamaterialeffectontheGroup’sfuturereportedresultsofoperations,financialpositionandcashflows.

TheBoardmonitorstheGroup’sexposuretoforeigncurrenciesandapprovesforwardcontractsastheBoardconsidersappropriate.TheGroupcurrentlyholdsUSdollar-denominatedmonetaryassetstohedgecurrencyriskonitsfutureoperatingrequirements.Balancesheldat30June2008aresetoutinthetablebelow.TheGrouppurchasedadditionalUSdollarmonetaryassetsafterthebalancesheetdatetohedgecertainexposuresarisingoutoftheacquisitionofXanthus.TheGroupwillseektomaintainabalanceofUSdollarmonetaryassetsrepresentingbetweenoneandtwoyearsofanticipatedUSdollarexpenditure.TheGroupbelievesthat,uponcommercialisationofitsproductcandidates,itwillbegintoreceiveincreasedrevenuesincurrenciesotherthantheUSdollar.

TheGrouphasnotsoughttohedgeitsnetinvestmentinoverseasoperations.

Numericalfinancialinstrumentsaresetoutbelow.Additionaldisclosuresaresetoutintheaccountingpoliciesrelatingtofinancialinstrumentsandforeigncurrencies.

InaccordancewithIAS39–‘Financialinstruments:Recognitionandmeasurement’,theGrouphasreviewedallcontractsforembeddedderivativesthatarerequiredtobeseparatelyaccountedforiftheydonotmeetcertainrequirementssetoutinthestandard.

Capital risk managementThecapitalstructureoftheGroupconsistsofcashandcashequivalentsandequityattributabletoequityholdersoftheparent,comprisingissuedcapital,reservesandprofitandlossaccountasdisclosedinNote27.TheGroupmanagesitscapitaltoensurethatentitiesintheGroupwillbeabletocontinueasgoingconcernsandtoensuretheGrouphassufficientcapitalavailabletomeetfuturefundingrequirements.DetailsoffundingrequirementsareexplainedintheLiquidityandcapitalresourcessectionoftheFinancialreviewonpage11.

TheGroupisnotsubjecttoanyexternallyimposedcapitalrequirements.


47

18. Financial instruments continuedInterest rate risk profile of the Group’s financial liabilitiesNointerestispayableontheGroup’sprovisionforNationalInsuranceonshareoptions.

TheGrouphasnoliabilitiesthatareexposedtointerestraterisk.

ThematurityprofileoftheGroup’sfinancialliabilitiesisshowninNotes15and19.

Interest rate risk profile of the Group’s financial assets Cash and cash Short-term Cashandcash Short-term equivalents deposits equivalents deposits 2008 2008 2007 2007 £’000 £’000 £’000 £’000

GBPound 24,330 33,000 14,393 10,000USdollars 9,531 – 37,021 –

33,861 33,000 51,414 10,000

Fixedrate<1year 27,031 33,000 46,838 10,000Floatingrate<1year 6,830 – 4,576 –

33,861 33,000 51,414 10,000

Thefixedrateshort-termdepositsinGBPoundandUSdollarswereplacedwithbanksforbetweenthreemonthsandsixmonthsandearnedinterestofbetween2.51%and6.5%intheyearended30June2008.FloatingratecashearnsinterestbasedonrelevantnationalLIBIDequivalents.

Thetablebelowshowstheimpactonpost-taxprofit/(loss)ifinterestratesoncashandcashequivalentsandshort-termdepositshadbeen1%higher/lowerwithallothervariablesheldconstant. Cash and cash Short-term Cashandcash Short-term equivalents deposits equivalents deposits 2008 2008 2007 2007 £’000 £’000 £’000 £’000

Increase/decreaseonpost-taxprofit/(loss):GBPound 31 183 68 63USdollars 70 180 20 –

Total 101 363 88 63

InterestratemovementsontradepayablesandotherreceivablesdonotpresentamaterialexposuretotheGroup’sbalancesheet.

Currency risk profileThefunctionalcurrencyoftheGroup’smajortradingsubsidiaryistheGBPound,andthemajorityofitstransactionsaredenominatedinthatcurrency.At30June2008,theGrouphadnetforeigncurrencyassetsof£13,408,000(2007:£36,830,000)inUSdollarsandliabilitiesof£132,000(2007:£nil)inEurosandliabilitiesof£53,000(2007:£46,000)inothercurrencies.

At30June2008,iftheGBPoundhadweakened/strengthenedby5%againsttheUSdollarwithallothervariablesheldconstant,posttaxprofitfortheyearwouldhavebeen£777,000higherand£568,000lower,respectively(2007:£1,938,000higherand£1,754,000lower).5%representsmanagement’sassessmentofareasonablypossiblechangeinforeignexchangerates.Thesensitivityanalysisinthetableaboveincludesonlyoutstandingforeigncurrencydenominateditemsandadjuststheirtranslationattheperiodendfora5%changeinforeigncurrencyrates.ThesensitivityanalysisincludestranslationofUSdollar-denominatedcashandcashequivalents,short-termdeposits,otherreceivablesandtradeandotherpayables.Profitismoresensitivetoexchangeratesintheyearended30June2007thanintheyearended30June2008duetothehighlevelofcashheldinUSdollarsatthe30June2007year-end.Movementsinothercurrenciesareconsideredimmaterial.

Borrowing facilitiesTheGrouphadnounusedborrowingfacilitiesat30June2008or30June2007.

Fair valuesWheremarketvaluesarenotavailable,fairvaluesoffinancialassetsandliabilitieshavebeencalculatedbydiscountingexpectedfuturecashflowsatprevailinginterestratesandbyapplyingyear-endexchangerates.

IntheopinionoftheGroupthereisnomaterialdifferencebetweenthefairvalueofcashandshort-terminvestmentsandthecarryingvaluesreferredtoabove.Carryingvaluesapproximatetofairvaluesbecauseoftheshortmaturityperiodofthesefinancialinstruments.


48


19. ProvisionsGroup Employer’s NIonshare optionsgains Restructuring Total £’000 £’000 £’000

At1July2006 40 – 40Chargedtotheincomestatement 469 – 469

At30June2007 509 – 509(Credited)/chargedtotheincomestatement (275) 476 201

At 30 June 2008 234 476 710

Provisionshavebeenanalysedbetweencurrentandnon-currentasfollows: 2008 2007 £’000 £’000

Currentliabilities 629 341Non-currentliabilities 81 168

710 509

Employer’s NI on share option gainsNationalInsurancepayableontheexerciseofshare-basedpaymentsistreatedasacash-settledshare-basedpaymentunderIFRS2andtheGroupmakeschargestotheincomestatementbasedonanestimateoftheNationalInsuranceliabilityinrespectoftheoutstandingawardsateachperiodend.Theprioryearprovisionhasnotbeenutilised.Thetimingoftheoutflowwillbedependentontheexerciseofshareoptions,whichisinturndependentontheirvestingperiodandshareprice.

Theaboveprovisionisoffsetbyanamountof£162,000(2007:£360,000)receivablefromemployeesasreimbursementofemployer’sNationalInsurancearisingonshareoptionsissuedonorafter6April1999withanetrefundtotheprofitandlossaccountof£77,000(2007:chargeof£149,000).

RestructuringTherestructuringprovisionrelatestocostsinrespectoftheclosureoftheMontrealoffice(seeNote6).Theassociatedcashoutflowsfortherestructuringcostareshortterminnature.

CompanyTheCompanyhasnoprovisionsforliabilitiesandcharges.

20. Share capitalGroup and Company 2008 2007 £’000 £’000

Authorised835,500,000(2007:626,463,100)ordinarysharesof1peach 8,355 6,2655,000,000(2007:5,000,000)preferencesharesof£1each 5,000 5,000

13,355 11,265

2008 2007 £’000 £’000

Issued, allotted, called-up and fully paid613,528,966(2007:446,315,606)ordinarysharesof1peach 6,135 4,4634,331,683(2007:4,331,683)preferencesharesof£1each 4,332 4,332

10,467 8,795

On17November2006,theCompanyincreaseditsauthorisedsharecapitalby27,100,000ordinarysharesof1pto£10,197,631.

On25May2007,theCompanyincreaseditsauthorisedsharecapitalby106,700,000ordinarysharesof1pto£11,264,631.

On16May2008,theCompanyincreaseditsauthorisedsharecapitalby102,336,900ordinarysharesof1pto£13,355,000.


49

20. Share capital continuedOn11July2006,theCompanyissued57,498newordinarysharesof1peachinlieuoffeespayabletoNon-ExecutiveDirectorsatapriceof16.25ppersharebeingthemid-marketclosingpriceonthelasttradingdayofthequarter(30June2006).

On2October2006,theCompanyissued41,527newordinarysharesof1peachinlieuoffeespayabletoNon-ExecutiveDirectorsatapriceof22.5ppersharebeingthemid-marketclosingpriceonthelasttradingdayofthequarter(29September2006).

On15December2006,theCompanyissued73,970,000newordinarysharesof1peachinaprivateplacingatapriceof35.5ppershare;thisrepresentsadiscountof9.0%totheclosingmid-marketpriceof39pperordinaryshareon14December2006,beingthelastBusinessDaybeforetheannouncementofthePlacing.

On3January2007,theCompanyissued24,190newordinarysharesof1peachinlieuoffeespayabletoNon-ExecutiveDirectorsatapriceof38.625ppersharebeingthemid-marketclosingpriceonthelasttradingdayofthequarter(29December2006).

On2April2007,theCompanyissued11,494newordinarysharesof1peachinlieuoffeespayabletoNon-ExecutiveDirectorsatapriceof49.75ppersharebeingthemid-marketclosingpriceonthelasttradingdayofthequarter(30March2007).

Between25October2006and1May2007theCompanyissued1,092,983newordinary1psharesonexerciseofemployeeshareoptionsatanexercisepriceof12.34ppershareandthecashreceivedwas£134,874.Between23April2006and4May2007theCompanyissued244,020newordinary1psharesonexerciseofemployeeshareoptionsatanexercisepriceof20.70ppershareandthecashreceivedwas£50,512.Between23April2006and2May2007theCompanyissued52,598newordinary1psharesonexerciseofemployeeshareoptionsatanexercisepriceof26.34ppershareandthecashreceivedwas£13,854.On1May2007theCompanyissued32,416newordinary1psharesonexerciseofemployeeshareoptionsatanexercisepriceof32.40ppershareandthecashreceivedwas£10,503.Thetaxationbenefitoftheseoptionshasincreasedthecarriedforwardlosses;seeNote16.

On3July2007,theCompanyissued18,571newordinarysharesof1peachinlieuoffeespayabletoNon-ExecutiveDirectorsatapriceof43.75ppersharebeingthemid-marketclosingpriceonthelasttradingdayofthequarter(29June2007).

On1October2007,theCompanyissued20,967newordinarysharesof1peachinlieuoffeespayabletoNon-ExecutiveDirectorsatapriceof38.75ppersharebeingthemid-marketclosingpriceonthelasttradingdayofthequarter(28September2007).

On2January2008,theCompanyissued34,010newordinarysharesof1peachinlieuoffeespayabletoNon-ExecutiveDirectorsatapriceof24.625ppersharebeingthemid-marketclosingpriceonthelasttradingdayofthequarter(31December2007).

On9April2008,theCompanyissued36,412newordinarysharesof1peachinlieuoffeespayabletoNon-ExecutiveDirectorsatapriceof23.00ppersharebeingthemid-marketclosingpriceonthelasttradingdayofthequarter(31March2008).

Between25September2007and31March2008theCompanyissued294,773newordinary1psharesonexerciseofemployeeshareoptionsatanexercisepriceof14.00ppershareandthecashreceivedwas£41,268.Thetaxationbenefitoftheseoptionshasincreasedthecarriedforwardlosses;seeNote16.

On11June2008,theCompanyissued28,469,197newordinarysharesof1peachinasubscriptionbyexistinginvestorsinXanthusatapriceof26ppershare;thisrepresentsadiscountof5.5%totheclosingmid-marketpriceof27.5pon15May2008beingthelastclosingbusinessdaypriortotheannouncement.

On11June2008,theCompanyissued51,923,077newordinarysharesof1peachinaprivateplacingatapriceof26ppershare;thisrepresentsadiscountof5.5%totheclosingmid-marketpriceof27.5pon15May2008beingthelastclosingbusinessdaypriortotheannouncement.

On11June2008,theCompanyissued86,416,353newordinarysharesof1peachinconsiderationfortheacquisitionofXanthusPharmaceuticals,Inc.atapriceof23.75ppersharebasedontheclosingsharepriceon10June2008(seeNote28).

Thezerocouponconvertibleredeemablepreferencesharesof£1eachhavethefollowingprincipaltermsattached:NorightstoreceivedividendsorotherdistributionsoutoftheprofitsoftheCompany.Onwindingup,thepreferenceshareholdersrankaboveordinaryshareholdersinpaymentofasumequaltothenominalcapitalpaidupbuthavenorightstoparticipatefurtherintheassetsoftheCompany.Norightstoreceivenoticeoforattendorvoteatanygeneralmeetingofshareholders.Convertibleintoconvertedordinarysharesatanypointinthetwoyearscommencing1July2003,basedonaformuladividingtheaggregatenominalamountofpreferencesharesheldbytheaveragesharepriceofordinarysharesfor10daysbeforeandaftertheconversionnoticeisserved.RedeemableattheoptionoftheCompanyatanytimeatpar.Noconversionorredemptionhasoccurred.

••

••

••


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21. Potential issues of ordinary sharesTheGroupissuesCSOPoptions,PerformanceAwardsandMatchingAwards,assetoutintheReportoftheBoardonremunerationandthetablesbelow,toeligibleemployeesfollowingtheissueofinterimandpreliminaryyear-endfinancialstatements.PermanentemployeesareeligibletoreceivetheseawardsatthediscretionoftheRemunerationCommittee.

CSOPoptionsweregrantedduringtheyeartocertainemployeesotherthanExecutiveDirectors.TheCSOPoptionsgrantedinSeptember2007andFebruary2008maybeexercisedifthesharepriceexceedstheexercisepriceby33%for30consecutivedaysinthesixmonthspriortothethirdanniversaryofthedateofgrant;noretestingoftheperformanceconditionisallowed.TheexercisepriceforCSOPoptionsistheaveragemid-marketclosingpriceforthe3dayspriortothedateofgrant.

PerformanceAwardsweregrantedinSeptember2007andFebruary2008toalleligibleemployeesincludingtheExecutiveDirectorsandseniormanagers.Theperformanceconditionsattachingtotheseawardsaresetoutbelow.

Allawardsaregrantedfornilconsiderationandsubjecttoindividualannuallimits.ThetotalnumberofsharesgrantedunderthevariousGroupincentiveplans,excludingthosegrantedonorbefore16December1998andlapsedandsurrenderedoptions,maynotexceed10%oftheissuedsharecapitalinany10-yearperiod(61,353,0001pordinarysharesasat30June2008;44,632,0001pordinarysharesasat30June2007).

CSOPs Average remaining Exercise contractual Number Number price Periodwhen life(years) of shares ofsharesDateofgrant pence exercisable 30.06.08 2008 2007

16.12.98 74.00 1998–2008 0.5 832,012 832,01216.12.98 32.40 1999–2008 0.5 10,804 10,80409.07.99 42.60 2002–2009 1.0 648,321 648,32116.12.99 104.10 2002–2009 1.5 43,220 43,22018.02.00 104.60 2003–2010 1.6 87,627 87,62709.06.00 100.90 2003–2010 1.9 376,149 378,06919.09.00 142.50 2003–2010 2.2 102,770 104,21513.02.01 211.90 2004–2011 2.6 78,535 79,50717.09.01 37.50 2004–2011 3.2 598,573 602,73816.04.02 20.70 2005–2012 3.8 1,652,864 1,652,86423.09.02 12.34 2005–2012 4.2 2,178,061 2,178,06120.02.03 26.34 2006–2013 4.6 929,964 929,96428.02.03 26.34 2006–2013 4.7 12,949 12,94901.10.03 38.17 2006–2013 5.2 1,075,296 1,081,19916.02.04 43.12 2007–2014 5.6 1,263,518 1,584,03123.02.04 44.84 2007–2014 5.6 752,676 752,67624.03.04 39.00 2007–2014 5.7 – 165,59801.04.04 40.50 2007–2014 5.8 135,802 135,80221.09.04 14.00 2007–2014 6.2 1,323,320 1,630,49621.02.05 22.20 2008–2015 6.6 3,962,543 3,967,17820.09.05 22.10 2008–2015 7.2 511,148 545,35024.02.06 22.10 2009–2016 7.7 240,898 274,29520.02.07 45.50 2010–2017 8.6 340,301 391,42015.09.07 31.75 2010–2017 9.2 791,552 –26.02.08 28.50 2011–2018 9.7 798,790 –26.02.08 28.75 2011–2018 9.7 194,549 –

18,942,242 18,088,396

Theaboveoptionsarenormallyexercisablefromthedayfollowingthethirdanniversaryofgrant,orfollowingachangeincontroloftheCompany,andsubjecttocertainconditionsrelatingtosharepriceperformanceassetoutintheReportoftheBoardonremuneration.


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21. Potential issues of ordinary shares continuedEIP Performance Awards Average Exercise remaining Number Number price Periodwhen contractual of shares ofsharesDateofgrant pence exercisable life(years) 2008 2007

20.09.05 1.00 2008–2011 3.2 1,591,762 1,591,76224.02.06 1.00 2008–2011 3.7 2,129,793 2,142,02407.06.06 1.00 2009–2012 3.9 489,208 489,20819.10.06 1.00 2009–2012 4.3 3,927,660 4,040,05820.02.07 1.00 2010–2013 4.6 2,077,537 2,115,32415.09.07 1.00 2010–2013 5.2 3,459,198 –26.02.08 1.00 2011–2014 5.7 2,872,941 –

16,548,099 10,378,376

EIP Matching Awards Average Exercise remaining Number Number price Periodwhen contractual of shares ofsharesDateofgrant pence exercisable life(years) 2008 2007

08.07.05 1.00 2008–2011 3.0 1,144,638 1,160,094

AsummaryoftheschemerulesisgivenintheReportoftheBoardonremuneration–Longertermincentives.

Optionsover294,773shareswereexercisedduringtheyear.Theweightedaverageexercisepricewas14.00pandtheweightedaveragesharepriceatthetimeofexercisewas28.8p.NoEIPPerformanceorMatchingAwardswereexercisedduringtheyear.Thetotalcashreceivedfromtheexerciseofshareoptionswas£41,000(2007:£210,000).Thetaxdeductionsexpectedtoarisefromtheexerciseofshareoptionstotalled£13,000fortheyearended30June2008(2007:£149,000).

Theweightedaverageexercisepricesovertheyearwereasfollows:

CSOPs 2008

| 2007

Weighted Weighted average average exercise exercise Number price (p) Number price(p)

Numberofoptionsoutstandingat1July 18,088,396 32.27 21,668,757 31.22–granted 1,840,465 29.98 410,208 45.50–forfeited (691,846) 39.09 (1,815,876) 31.20–exercised (294,773) 14.00 (1,422,017) 14.75–expired – – (752,676) 44.84

Outstanding at 30 June 18,942,242 32.08 18,088,396 32.27

Exercisable at 30 June 8,186,868 26.44 6,867,713 28.84

EIP Awards 2008

| 2007

Weighted Weighted average average exercise exercise Number price (p) Number price(p)

Numberofawardsoutstandingat1July 11,538,470 1.00 6,006,601 1.00–granted 6,447,827 1.00 6,366,655 1.00–forfeited (293,560) 1.00 (834,786) 1.00

Outstanding at 30 June 17,692,737 1.00 11,538,470 1.00

Exercisable at 30 June – – – –

TheaboveEIPAwardstableincludesPerformanceandMatchingAwards.


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22. Share-based paymentsTheGroupoperatesanumberofshare-basedincentiveschemesasdetailedinNote21above.Thefairvalueperawardgrantedandtheassumptionsusedinthecalculationsareasfollows:

Dateofgrant Typeofaward Numberof Exercise Sharepriceat Fairvalueper Expected Award Risk-free (seeNote21forterms) awards price(p) grantdate(p) award(p) volatility life rate

20.02.03 CSOP 1,612,994 26.340 25.40 18.92 111% 4.25 3.8%28.02.03 CSOP 81,083 26.340 24.41 17.58 106% 4.25 3.8%01.10.03 CSOP 1,682,104 38.170 36.99 17.72 61% 4.25 4.4%16.02.04 CSOP 1,917,134 43.125 43.25 18.15 50% 4.25 4.6%23.02.04 CSOP 752,676 44.840 43.75 18.50 52% 4.25 4.7%23.02.04 CSOP 752,676 44.840 43.75 16.10 52% 4.25 4.7%24.03.04 CSOP 192,307 39.000 39.75 16.36 49% 4.25 4.6%01.04.04 CSOP 135,802 40.500 40.50 15.94 47% 4.25 4.7%21.09.04 CSOP 2,257,681 14.000 13.50 8.95 93% 4.25 4.8%21.02.05 CSOP 5,222,536 22.200 22.00 11.75 68% 4.25 4.7%08.07.05 EIPMatching 1,336,038 1.000 18.50 11.17 44% 3.00 4.2%20.09.05 CSOP 759,791 22.100 22.25 6.45 35% 4.25 4.3%20.09.05 EIPPerformance 1,890,880 1.000 22.25 14.38 35% 3.00 4.0%24.02.06 CSOP 421,648 22.100 22.44 5.08 26% 4.25 4.2%24.02.06 EIPPerformance 2,573,171 1.000 22.44 14.50 26% 3.00 4.3%07.06.06 EIPPerformance 489,208 1.000 16.25 9.70 56% 3.00 4.7%19.10.06 EIPPerformance 2,775,395 1.000 26.75 22.18 92% 3.00 5.0%19.10.06 EIPPerformance 1,416,674 1.000 26.75 22.18 92% 3.00 5.0%20.02.07 CSOP 410,208 45.500 49.75 24.68 62% 3.00 5.3%20.02.07 EIPPerformance 2,174,586 1.000 49.75 38.60 62% 3.00 5.3%15.09.07 CSOP 821,745 31.750 32.00 13.99 55% 3.00 5.0%15.09.07 EIPPerformance 3,574,886 1.000 32.00 19.3 55% 3.00 5.0%26.02.08 CSOP 824,171 28.500 28.75 13.36 61% 3.00 4.4%26.02.08 ISO 194,549 28.750 28.75 13.28 61% 3.00 4.4%26.02.08 EIPPerformance 2,872,941 1.000 28.75 22.17 61% 3.00 4.4%

Adescriptionofthekeyassumptionsusedincalculatingtheshare-basedpaymentsfollows:1. TheMonteCarlovaluationmethodologywasused.2. PerformanceconditionshavebeenincorporatedintotheMonteCarlomodelinarrivingatthefairvalue.3. Theexpectedvolatilityisbasedonhistoricalvolatilityoveraperiodoftimepriortograntcommensuratewiththeexpectedtermofeach

award(orperiodsinceflotationifshorter)withmoreweightbeingplacedonmorerecentsharepricemovements.4. Expecteddividendyieldisnil.5. TheriskfreerateisequaltotheprevailingUKGiltsrateatgrantdate,whichiscommensuratewiththeexpectedterm.6. Thechargeisspreadovertheexpectedvestingperiodonastraight-linebasis.7. Inordertocalculatetheestimatedleaversattheyearended30June2005fortheCSOPsandEIPPerformanceAwardsafigureof15%

pro-ratafortheunexpiredperiodafter1January2005wasused.Intheyearended30June2007CSOPsandEIPPerformanceAwardsthathadcompletedthethree-yearvestingperiod,orwerewithinthreemonthsoftheirthree-yearvestingperiod,werechargedbasedonthenumberofawardsthatcouldstillvest.Giventhehighernumberofleaversthananticipated,theremainingCSOPsandEIPPerformanceAwardswereadjustedtoafigureof20%pro-ratedfortheunexpiredperiodafter1January2005.FortheEIPMatchingAwardsgrantedinJuly2005theestimatedleaverratewasassumedat30%.ThisishigherthantheCSOPsandEIPPerformanceAwardsastheseawardscanlapseifaholderleavesemploymentbutalsoiftheholderremainsinemploymentbutsellstheirInvestedShares.Intheyearending30June2008theleaverrateremainedat20%forallCSOPsandPerformanceAwardsand30%forMatchingAwards.

Thetotalchargefortheyearrelatingtoemployeeshare-basedpaymentplanswas£1,051,000(£625,000waschargedtoresearchanddevelopmentand£426,000waschargedtoadministration)(2007:£893,000(£564,000waschargedtoresearchanddevelopmentand£329,000waschargedtoadministration)),allofwhichrelatedtotheaboveequity-basedtransactions.

23. Share premiumGroup and Company 2008 2007 £’000 £’000

At1July 100,451 76,221Issueofshares 20,158 25,748Expensesofshareissues (980) (1,518)

At 30 June 119,629 100,451


53

24. Shares to be issued 2008 2007 £’000 £’000

At 30 June 2,273 –

SharestobeissuedrepresentdeferredconsiderationsharesrelatedtotheacquisitionofXanthusPharmaceuticals,Inc.ThenumberofsharesissubjecttoareductionforanyindemnityclaimsmadebyAntisomaorotherwiseasprovidedintheacquisitionagreement.Thedeferredconsiderationsharesareissuable18monthsaftertheclosingdateofthetransaction.

25. Other reservesGroup Otherreserve: Merger retranslation reserve Total £’000 £’000 £’000

At1July2006 614 19,595 20,209Foreignexchangeadjustmentsonconsolidation (1,638) – (1,638)

At 30 June 2007 (1,024) 19,595 18,571

At1July2007 (1,024) 19,595 18,571Movement – 19,660 19,660Foreignexchangeadjustmentsonconsolidation (235) – (235)

At 30 June 2008 (1,259) 39,255 37,996

Company Merger reserve £’000

At1July2006

At 30 June 2007 45,234

Movement 19,660

At 30 June 2008 64,894

Theretranslationreserverelatestoforeignexchangemovementsonconsolidation.

Themergerreserveat1July2006and30June2007representsthereservesarisingontheacquisitionofAntisomaResearchLimitedandtheacquisitionofAntisoma,Inc.ThemovementonthemergerreserverepresentsthereservesarisingontheacquisitionofXanthusPharmaceuticals,Inc.

26. Profit and loss accountGroup 2008 2007 £’000 £’000

At1July (81,538) (72,681)Profit/(loss)fortheyear 12,329 (9,750)Shareoptions:valueofemployeeservices 1,051 893

At 30 June (68,158) (81,538)

Company 2008 2007 £’000 £’000

At1July 5,721 4,424(Loss)/profitfortheyear (930) 404Shareoptions:valueofemployeeservices 1,051 893

At 30 June 5,842 5,721


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27. Statement of changes in equityGroup Share Share Sharesto Otherreserve: Otherreserve: Profitand capital premium beissued retranslation merger loss Total £’000 £’000 £’000 £’000 £’000 £’000 £’000

At1July2006 8,040 76,221 – 614 19,595 (72,681) 31,789Lossfortheyear – – – – – (9,750) (9,750)Newsharecapitalissued 755 25,748 – – – – 26,503Expensesonshareissue takentosharepremium – (1,518) – – – – (1,518)Shareoptions:valueof employeeservices – – – – – 893 893Foreignexchangeadjustments onconsolidation – – – (1,638) – – (1,638)

At 30 June 2007 8,795 100,451 – (1,024) 19,595 (81,538) 46,279

At1July2007 8,795 100,451 – (1,024) 19,595 (81,538) 46,279Profitfortheyear – – – – – 12,329 12,329Newsharecapitalissued 1,672 20,158 – – 19,660 – 41,490Expensesonshareissuetaken tosharepremium – (980) – – – – (980)Sharecapitaltobeissued – – 2,273 2,273Shareoptions:valueof employeeservices – – – – – 1,051 1,051Foreignexchangeadjustments onconsolidation – – – (235) – – (235)

At 30 June 2008 10,467 119,629 2,273 (1,259) 39,255 (68,158) 102,207

Company Share Share Sharesto Otherreserve: Otherreserve: Profitand capital premium beissued retranslation merger loss Total £’000 £’000 £’000 £’000 £’000 £’000 £’000

At1July2006 8,040 76,221 – – 45,234 4,424 133,919Profitfortheyear – – – – – 404 404Newsharecapitalissued 755 25,748 – – – – 26,503Expensesonshareissue takentosharepremium – (1,518) – – – – (1,518)Shareoptions:valueof employeeservices – – – – – 893 893

At 30 June 2007 8,795 100,451 – – 45,234 5,721 160,201

At1July2007 8,795 100,451 – – 45,234 5,721 160,201Lossfortheyear – – – – – (930) (930)Newsharecapitalissued 1,672 20,158 – – 19,660 – 41,490Expensesonshareissuetaken tosharepremium – (980) – – – – (980)Sharestobeissued – – 2,273 – – – 2,273Shareoptions:valueof employeeservices – – – – – 1,051 1,051

At 30 June 2008 10,467 119,629 2,273 – 64,894 5,842 203,105


55

28. AcquisitionsOn11June2008,theGroupacquiredtheentiresharecapitalofXanthusPharmaceuticals,Inc.bytheissueof86,416,353sharesof1peachwithafairmarketvalueof23.75pbasedontheclosingsharepriceon10June2008,and9,568,951deferredconsiderationsharesof1peachwithafairmarketvalueof23.75pbasedontheclosingsharepriceon10June2008.Thedeferredconsiderationsharesareissuable18monthsaftertheclosingdateofthetransactionandaresubjecttodeductionsbasedonclaimsforindemnitybyAntisomaplcorasotherwiseallowedunderthetermsoftheacquisitionagreement.

DetailsofthebookandfairvaluesoftheassetsandliabilitiesofXanthusPharmaceuticals,Inc.,asat11June2008aresetoutbelow: Provisional Bookvalue Adjustments fairvalue £’000 £’000 £’000

Fixedassets–Intangibleassets – 26,781 26,781–Property,plantandequipment 142 (23) 119Tradeandotherreceivables 791 – 791Cashandcashequivalents 629 – 629Tradeandotherpayables (4,657) – (4,657)

Net assets acquired (3,095) 26,758 23,663

Sharesissued 20,524Sharestobeissued 2,273Expensesofacquisition 866

Total consideration 23,663

Analysisofthenetcashoutflowinrespectofacquisitions Total £’000

Expensesonacquisition (866)Cashacquired 629

Netcashoutflowinrespectofacquisitions (237)

XanthusPharmaceuticals,Inc.isinvolvedinthedevelopmentandcommercialisationofpotentialtherapeuticproductsforthetreatmentofcancer.

Thefairvalueadjustmentscontainprovisionalamounts,whicharesubjecttofinalisationwithintwelvemonthsofthedateoftheacquisition.

TheCompanycontributed£niltorevenueandalossof£767,000fortheperiod.Iftheacquisitionhadoccurredatthestartoftheperiod,theadditionalrevenueandlossfortheyearwouldhavebeen£niland£14,081,000,respectively.

29. Capital commitmentsTheGroupandCompanyhadnocapitalexpenditurecontractedforbutnotprovidedinthefinancialstatementsat30June2008(2007:£nil).

30. Financial commitments and contingenciesAt30June2008theGroupandCompanyhadtotalcommitmentsundernon-cancellableoperatingleasesasfollows:

Group Land and Landand buildings Other buildings Other 2008 2008 2007 2007 £’000 £’000 £’000 £’000

Commitments under non-cancellable operating leases expiring:Withinoneyear 1,431 12 480 8Betweenoneandtwoyears 1,077 9 413 6Betweentwoandthreeyears 964 7 262 –Betweenthreeandfouryears 868 1 131 –Betweenfourandfiveyears 407 – – –Afterfiveyears – – – –

4,747 29 1,286 14

TheGroupleasesofficesandlaboratoriesundernon-cancellableoperatingleaseagreements.Theleaseshavevariousterms,escalationclausesandrenewalrights.TheGroupalsoleasesvideoconferencingequipmentandcopier/faxmachinesundernon-cancellableoperatingleaseagreements.


56


30. Financial commitments and contingencies continuedCompany Land and Landand buildings buildings 2008 2007 £’000 £’000

Commitments under non-cancellable operating leases expiring:Withinoneyear 658 262Betweenoneandtwoyears 658 262Betweentwoandthreeyears 658 262Betweenthreeandfouryears 658 131Betweenfourandfiveyears 407 –Afterfiveyears – –

3,039 917

31. Related party disclosuresDuringthetwoyearsended30June2008theDirectorsoftheCompanysubscribedfornewordinarysharesof1peachasfollows:

Number ofshares PriceperDirector subscribed share(p) Date

GrahameCook 22,307 16.250 11.07.06MichaelPappas 17,307 16.250 11.07.06DaleBoden 17,884 16.250 11.07.06GrahameCook 16,111 22.500 02.10.06MichaelPappas 12,500 22.500 02.10.06DaleBoden 12,916 22.500 02.10.06GrahameCook 9,385 38.625 03.01.07MichaelPappas 7,281 38.625 03.01.07DaleBoden 7,524 38.625 03.01.07MichaelPappas 5,653 49.750 04.04.07DaleBoden 5,841 49.750 04.04.07MichaelPappas 8,571 43.750 04.07.07DaleBoden 10,000 43.750 04.07.07MichaelPappas 9,677 38.750 01.10.07DaleBoden 11,290 38.750 01.10.07GlynEdwards 150,038 23.610 20.11.07MichaelPappas 15,228 24.625 02.01.08DaleBoden 18,782 24.625 02.01.08MichaelPappas 16,304 23.000 09.04.08DaleBoden 20,108 23.000 09.04.08BarryPrice 100,000 22.250 06.06.08GlynEdwards 470,000 21.250 06.06.08MichaelPappas 100,000 21.750 09.06.08

Subsequent share purchasesTheDirectorsoftheCompanypurchasednewordinarysharesof1peach,havingelectedtotakeapartoftheirfeesinnewlyissuedsharesoftheCompany,asfollows: Number ofshares PriceperDirector subscribed share(p) Date

MichaelPappas 16,304 23.000 07.07.08DaleBoden 20,108 23.000 07.07.08


57

31. Related party disclosures continuedTransactions with Kudos Independent Financial Services LimitedKudosIndependentFinancialServicesLimited(‘KIFS’)isarelatedpartybecauseMichaelPappasisaDirectoroftheCompanyandofKIFS.KIFSadvisestheCompanyinrelationtopensions,permanenthealthinsuranceandlifeassuranceandderivesitsincomebywayofcommissionfromthesuppliersoftheseproducts.NoincomeisderiveddirectlyfromtheCompany.

Transactions with Leventis Holding SALeventisHoldingSA(‘LH’)isarelatedpartyasitwasasubstantialshareholderinAntisomaplcduringtheyearunderreview.MichaelPappasistherepresentativeofLHontheBoardofAntisomaplc.

AntisomaResearchLimitedhasleaseholdpremisesatWestAfricaHouse,Ealing,UK.Theseofficesaresub-leasedfromLeventisOverseasLimited(asubsidiaryofLH).Renthasbeenchargedonthespacesub-leasedbyAntisomaResearchLimitedattherateof£201,000(2007:£201,000)perannum,withanadditionalannualservicechargeof£14,000(2007:£14,000).Theamountoutstandingattheyear-endwas£nil(2007:£74,000).SixmonthsnoticeofterminationoftheleasewasgivenbyAntisomainFebruary2008.

CompanyUnderIFRStransactionsbetweentheCompanyandtherestoftheGroupmustbedisclosed.TheCompanyenteredintothefollowingtransactionsduringtheyearwiththerestoftheGroup: 2008 2007 £’000 £’000

Inter-company receivableAt1July 110,357 84,913Additionalamountsadvanced 18,305 25,444

At 30 June 128,662 110,357

TheCompanyhasissuedshareoptionstoemployeesofsubsidiaryundertakingsandinaccordancewithIFRS2hasmadeachargeintheyearof£1,051,000(2007:£893,000).

TheCompanyprovidesfinancingtoitsoperatingsubsidiaries.DetailsofintercompanyloanscanbefoundinNote14.

KeyManagementcompensationisdisclosedinNote4.TheCompany’stransactionswithDirectorsaredescribedonpage55.

TheDirectorsconsiderthatthereisnoultimatecontrollingpartyoftheCompany.

32. Post-employment benefitsTheGroupoperatesadefined-contributionGrouppersonalpensionschemeforemployeesandExecutiveDirectorsofAntisomaResearchLtd.ThetotalpensioncostfortheGroupwas£434,000(2007:£342,000).Theoutstandingpensioncontributionsat30June2008were£29,000(2007:£40,000).TheGroupalsocontributestothe410kplansofitsemployeesinNorthernAmericaandcontributedatotalof$29,000intheperiodfrom11Juneto30June2008.


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Financial Advisor and BrokerPiper Jaffray LtdOneSouthPlaceLondonEC2M2RB

AuditorsPricewaterhouseCoopers LLP1EmbankmentPlaceLondonWC2N6RH

RegistrarsCapita RegistrarsNorthernHouseWoodsomeParkFenayBridgeHuddersfieldWestYorkshireHD80LA

Legal AdvisorsCMS Cameron McKenna LLPMitreHouse160AldersgateStreetLondonEC1A4DD

List of advisors


59

Notes


60

Notes

01 Highlights

04 Portfolio summary

06 Joint Chief Executive and Chairman’s statement

10 Financial review

12 Board of Directors

14 Directors’ report (including Business review)

17 Corporate social responsibility review

19 Report of the Board on remuneration

25 Corporate governance

28 Independent auditors’ report to the members of Antisoma plc

29 Consolidated income statement

29 Consolidated statement of recognised income and expense

30 Consolidated balance sheet

31 Company balance sheet

32 Consolidated cash flow statement

33 Company cash flow statement

34 Notes to the consolidated financial statements

58 List of advisors

Overview Governance Financial statements

Contents

TargetingcancerAntisoma plcAnnual Report and Accounts 2008

Antisom

a plc A

nnual Repo

rt and Accounts year end

ed 30 June 2008

www.antisoma.comAntisoma plcChiswick Park Building 5London W4 5YFUK

T: +44 (0)20 3249 2100F: +44 (0)20 3249 2101 E: [email protected]: www.antisoma.com Company registered number 03248123

targeting cancer - sarossa plc - welcome · 2019. 11. 8. · (cll) oral fludarabine > oral...

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